The Bank of England's rate decision has been an ominous presence around the past three industrial production releases, and this month will be no different.

The Federal Reserve cut interest rates by 25bp yesterday and hinted that they will pause when they meet again in June. In response to this shift, the market immediately priced in an 85 percent chance that interest rates will be left at 2 percent at the next two monetary policy meetings.

Canadian fundamental data will have the stage to itself, with no U.S. releases scheduled for Friday, which should provide trade worthy event risk.

Conditions in the UK housing and credit markets have steadily gone from bad to worse, and are becoming eerily reminiscent of the beginning of the collapse of the US housing sector.

Fading risk aversion pushed the US dollar back and forth as market participants looked for a 100 basis point rate cut by the Fed, but the central bank failed to meet market expectations as they reduced the interest rate by 75 basis points.

Currency market intervention remains a hot issue this week, as the risk of physical intervention by the Bank of Japan has jumped significantly while European Central Bank President Jean-Claude Trichet engaged in some jaw-boning of the euro.

The US dollar remained relatively unchanged following an uneventful return from the US Thanksgiving holiday weekend.

Investor sentiment seems to be on the rebound, but signs that the credit crunch has merely gone into hibernation include the big hit to earnings reported by major US banks, the existence of SIVs in money market funds, and the substantial number of mortgages that may fall into default in the near future.

The British pound has been put into a holding pattern for nearly three weeks against its US counterpart as the market waits for a significant shift in fundamentals to usher the pair into the next leg of its trend.