US data on Thursday is likely to highlight weakness in the economy. However, given the extent of the recent EUR/USD move, the pair may simply consolidate around the record highs over the next two days and, as a result, any weakness in the greenback that ensues may be only short-lived.

How the forex, fixed income, and equity markets will react on Wednesday will be dependent not only upon the actual policy decision by the Federal Reserve, but also on how badly the housing market is doing as well as whether some inflation risks remain.

The gloomy US economic picture may only get worse on Tuesday, just ahead of the Federal Reserve’s highly anticipated rate decision on Wednesday, as housing and sentiment data are anticipated to disappoint.

While the Reserve Bank of New Zealand left rates steady on October 24 at a record high of 8.25 percent, as expected, the accompanying policy statement issued by RBNZ Governor Alan Bollard remained slightly hawkish.

The potential impact of Japanese economic data on the forex and equity markets is questionable, as USD/JPY and the Nikkei 225 have been driven more by risk aversion trends lately. However, if the data proves to be surprising, the news could shake carry trades and Japan’s stock market up.

US economic data will likely prove to be mixed on Thursday, as Durable Goods Orders are anticipated to improve while New Home Sales are expected to fall.

The release of existing home sales figures in line with or worse than expectations could rattle the equity, forex, and fixed income markets as the figures may spark additional speculation that credit markets and the economy still face many road blocks before they can fully recover.

Canadian retail sales growth during the month of August is anticipated to improve after faltering during the month prior.

The potential for a weaker-than-expected result in the Canadian retail sales release on Tuesday could finally help pull the Canadian dollar a bit lower.

The Bank of Canada this week noted that inflation would return to target sooner than expected, but if Friday’s inflation data proves to be unexpected, the Canadian dollar is likely to respond immediately.