Over the past few months, Canadian economic data has generally surprised to the upside – with the exception of last month – which has proven to be bullish for the Canadian dollar.

On Thursday, two major central bank decisions are scheduled to be released, and the results could have a large impact on the markets, particularly in FX.

If the Ivey PMI data proves to be disappointing, fears that Canada will follow the US into a major economic slowdown will pervade throughout the Canadian financial markets.

If the Federal Reserve is dovish and aggressively cutting rates, the Reserve Bank of Australia is quite the opposite and may exhibit their hawkish bias with a rate hike.

The release of Australian trade and housing data may encourage the markets to ramp up speculation that the RBA will move to hike rates on February 4.

The Federal Reserve’s rush to slash the federal funds rate along with rapidly deteriorating economic conditions in the US has sparked fears that global expansion is in for a major downturn.

The gloomy US economic picture may only get worse on Wednesday morning, just ahead of the Federal Reserve’s highly anticipated rate decision.

The consumer confidence index is forecasted to fall to a two-year low amid economic conditions that have sparked widespread pessimism throughout the financial markets.

A worse-than-expected new home sales report could exacerbate market speculation about the Fed's next move as signs continue to suggest that the US economy is in or nearing a recession.

Canadian headline and core CPI measures are expected to remain below their inflation targets; the BoC is anticipated to cut rates again to keep aggregate supply and demand in balance and to return inflation to target over the medium term.