The BoC decision is unlikely to surprise as the bank should reiterate its commitment to hold the current policy rate until the end of Q2 2010. The trade balance is expected to improve but still remain in deficit territory and housing starts should continue their rebound from the April 2009 low. USDCAD has roughly stayed within a 1.04-1.08 corridor over the past few weeks and upcoming data releases are not likely to significantly push the CAD either way. We maintain our 1m USDCAD forecast of 1.05.

The Eurozone data calendar is relatively light in the aftermath of the ECB interest rate decision. However, the ECB will be taking note of activity indicators to ensure their current pace of tightening is consistent with fundamental developments in the Eurozone economy. We expect industrial production to come in at 0.9%m/m (cons. 1.0%m/m) and CPI will be confirmed at 0.3%y/y. Trichet will be speaking on Monday and Friday and other Governing Council members will offer their views on the economy and policy throughout the week.

The SNB is in focus on Thursday with its interest rate decision. The central bank is expected to keep rates on hold and maintain unconventional measures to fight deflation risks, despite recent data pointing towards signs of recovery. The intervention stance will also likely be affirmed. Among other key releases, unemployment is expected to register a marginal rise to 4.20% on a seasonally adjusted basis, up from 4.10% previously.

Market attention for the week will focus on the Pre-Budget Report and the MPC decision, on Wednesday and Thursday respectively. The policy rate and size of the QE will almost certainly remain unchanged at 0.5% and £200bn respectively. If we are right, the MPC will not issue a rationale for its decision next week. In short, the decision will be a non-event from a market point of view. In our view, the gilt asset purchase programme has come to an end but the BoE will keep that option open through its rhetoric. The window for private sector asset purchases, however, will likely remain open. That said, if gilt yields jump massively, the BoE will make its presence felt. On the data front, industrial and manufacturing sector data for October will indicate a slowdown in the pace of contraction of activity. The Halifax house prices due for release this week, should indicate a supine recovery in the housing market. The UK Pre-Budget report will also be closely watched as the UK government struggles to balance a mounting deficit with further public investment. We target gradual sterling strength in the medium term as policy normalises.

The yen did an about face amid the flurry of comments by government officials and better US unemployment and payrolls data. With USDJPY close to 90 at the time of writing, that should mean less official comments on the yen though we will look for further details on the new stimulus package and for any other details on how officials will deal with deflation. We are looking for further USDJPY upside in 2010 as yield differentials start to move back in the favor of the US. We think that could happen in the middle of 2010, which is when we are looking for the first Fed rate hike. Among the data releases, we are looking for final Q3 GDP at 2.7% annualized and the current account and the trade balance are expected a little higher. Meanwhile, machine orders will likely remain relatively unchanged from the -22.0% y/y previously, and we are looking for a slight dip of 3.1% in the m/m figure versus the previous 10.5% monthly gain.

November employment data headlines Australian data releases. After a cumulative 65k rise in the past two months, we look for jobs to be flat, with a 0.1% rise in the unemployment rate to 5.9%. Job ads should rise after a fall. Consumer and business confidence should ease from high levels after recent rate hikes, while home lending likely contracted after a strong rise. The Q3 current account deficit should widen, seeing net exports subtract solidly from growth. The RBA's Stevens will also speak.

In New Zealand, we (like the consensus) expect no change in the RBNZ's OCR but do expect progress towards an 'exit strategy'. This should involve a watering down (if not dropped entirely) of the commitment to keep the OCR at 2.5% until 2H10 as the emergency OCR level no longer looks sustainable in light of the current economic situation and outlook as the global threat has passed.

We look to sell AUDNZD on rallies as the policy divergence between the RBA and RBNZ look to narrow into Q1 2010 when we see the start of RBNZ policy rate hikes.

Source: UBS, Bloomberg