BoC to hold despite weaker data

On Wednesday the BoC will hold its last meeting of the year. The bank is expected to keep its policy rate unchanged, as inflation is holding well and economic activity in the non-resource sector compensates the decline in the oil and commodity sectors. The BoC expects exports and the Canadian consumer to keep supporting the economy, as the investment outlook continues depressed due to lower capex in the energy sector. 

Recent data, however, have been below expectations, and the latest print for retail sales was negative after eight months of expansion. Data this week will allow the market to have a better picture of the state of the Canadian economy, as Q3 GDP is released on Tuesday (consensus 2.4% y/y vs. previous -0.5%). On Friday, the employment report will be released. The consensus expects the economy to have lost 0.7k jobs on net after creating 44k in October. 

Finally, November's RBC and Ivey PMIs are released on Tuesday and Friday, respectively. The loonie will be following the GDP reading and BoC's statement, with the reaction to the local employment report muted by NFP, but otherwise should keep tracking oil prices and the general dollar trend.