This week is going to be the start of a series of central bank meetings that will shape the interest rate environment in 2016. Much of the attention is on the ECB cutting rates and the US Fed raising rates. The consensus trade will most likely not be disappointed and could even provide a bit of a contrarian bounce in the opposite direction of expectations (EUR weakening and the USD rising). The interesting news will be what is happening on the sidelines with other central bank and how they will position themselves, or react to the rate disparity.
Australian interest rates will come out Tuesday and Canada will have a rate decision on Wednesday. Both of these countries are experiencing housing markets with high prices in many of their cities. They are also exposed to commodities which are not in a good position currently with a slowing China and a higher Dollar.
Further out you have the Bank of England, Swiss banks and Sweden. How will these countries react to the ECB meeting, which is expected to be very dovish and bring down the EUR. Talking down their own currencies, or even looking to intervene in 2016 could be on the table.
Finally the US and Japan will have their meetings where the US is expected to tighten and Japan will be watched for any signs of further easing by the BOJ. The Japanese government seems satisfied with the current state of the economy and its ability to hit the 2% inflation target. Maybe the talk of the other major central banks will start to change this tone and if not perhaps the markets will start to question the dedication to reforms (and the safe haven status of the YEN) in the coming year.