Ahead of next week’s major central bank meetings and key data releases, there have been some interesting moves in the markets with the euro/U.S. dollar currency pair in particular showing relative strength. Although the Federal Reserve is almost certain to raise interest rates next week, it is the European Central Bank which all of a sudden is looking to be the more anticipated meeting.

The FX markets have been a little bit livelier today even if the economic calendar has been fairly quiet with the exception of services PMI data from both the UK and US.

As jitters over Italy’s political situation calmed down yesterday, risk-sensitive assets rallied across the board. Haven bonds and the yen fell, while stocks rose sharply amid hopes that fresh elections may be avoided.
Emerging market currencies across the globe are coming under renewed selling pressure during trading this week.
Today has been a little light on the data front with the exception of Canadian employment figures, which were released earlier. Headline employment had been expected to have risen by around 17,800 last month, while the unemployment rate was seen steady at 5.8%. While the unemployment rate did remain at 5.8%, the headline figure disappointed as employment fell by 1,100.
The Aussie could extend its gains next week unless the RBA’s monetary policy meeting minutes on Tuesday convey a surprisingly dovish message or the Australian employment numbers on Thursday disappoint expectations. From the United States, next week’s key data include retail sales on Tuesday and industrial production and some housing market data on Wednesday.
The euro ran stops, taking out the low from Friday after Nonfarm Payroll shortly before Atlanta Fed President Bostic spoke this morning.
As expected today the Federal Reserve did not raise interest rates. The dollar initially reacted lower to the statement but solidified itself before trading to a new session high.
While U.S. economic data has not given the dollar much reason to extend gains, data from the Eurozone has surely not done the euro any favors.
ECB meeting is the headline event of the week. They are expected to leave policy unchanged and the statement is due at 6:45 am CT.