The key event next week - the ECB meeting, seems to be interesting. This week at least two officials who are involved in shaping the ECB's policy said EU inflation outlook allow starting discussions on the phasing out of the current major asset purchase (PEPP). At the same time, expectations that the Fed will start aggressively curtailing QE have weakened, as the NFP report in August did not live up to expectations – the growth of Payrolls was almost three times less than the forecast (235K). This means that it may take longer for the Fed to make sure that the pace of employment recovery warrants tightening of credit conditions. The risk of further narrowing of the divergence between the ECB and the Fed policies will likely be a key driver of EURUSD rally next week.

Also, next week the decision on the interest rate will be made by the Bank of Canada and the Bank of Australia. Mounting signals of slowdown in global growth rates will most likely force these central banks to take a less aggressive stance in tightening policy, so the currencies of these CB’s may decline. In addition, growing slack in the oil market could cast a pall on CAD’s recent strength.

On Friday, the Central Bank of the Russian Federation will also hold a meeting on monetary policy. There is a risk of further strengthening of the ruble against the dollar and the euro, as the Bank of Russia made it clear at the last meeting that it did not complete rate hiking cycle. The bank is not expected to hike interest rate, however forward guidance could trigger additional ruble upside, in particular if it contains a hint of another rate hike in Q4.