We are set for another busy week in the currency market starting off today with European inflation data in the form of Consumer Price Index which has already come out lower than expected showing a decline to 0.5% compared to 0.7% last month which brings sharply back to focus the threat of deflation in the single currency economy. Previously Mr Draghi, head of the European Central Bank (ECB) has stated that while slowing inflation is a problem they were not prepared to act just yet however the fact that inflation has dropped again surely this will put pressure back onto Mr Draghi and may even force the hand of the ECB to deal with the inflation issue. Should we see deflation hit the Eurozone then it could lead to long lasting economic issues and could weaken the Euro even further, especially if we see the UK economy continue to go from strength to strength.

Later on today we have Canadian Gross Domestic Product (GDP) figures which are expected to show a big improvement which could provide some support to the Canadian Dollar, also today we have speaches from the head of the Federeal Reserve Bank of America, Janet Yellen, and also from Governor of the Bank of England (BoE) Mark Carney. It will be interesting to hear what both these influencial people have to say as the markets often watch closely for hints or signs as to how they will work their economic policies moving forward. For Mrs Yellen the focuse will be on tapering and whether the Fed will continue reducing their bond buying scheme while in the UK any comments about forward guidance could provide a shift for Sterling exchange rates.

Tomorrow we have the latest Australian interest rate decision where it is expected rates will be kept on hold at 2.5% but any change from this could spark some big movements while any accompanying statement from the RBA Governor Glenn Stevens will also be closely monitored. The Eurozone unemployment figures are also announced tomorrow morning which could give an interesting insight as unemployment has been a big problem for many of the major Eurozone countries especially Spain.

On Wednesday we have the latest Eurozone GDP figures which are absolutely key for highlighting the performance of an economy, previously the level had been at 0.1% and so if we see the levels drop to a negative figure then there will be a lot of talk about recession in the single currency economy and therefore could be bad news for EUR exchange rates.

Thursday see’s the latest Eurozone interest rate decision where it is expected that rates will remain on hold at the current low level of 0.25% but with the fall in inflation today it may make the meeting far more interesting and time will tell whether Mr Draghi will act.

Finaly on Friday we have unemployment in Canada and also the crucial nonfarm payroll figures which can often produce a huge amount of volatility for USD exchange rates. So, if you need to buy or sell USD then Friday could be an important day.

So, with so much key economic data due for release it will be very imporant to keep a close eye on the currency markets and all the developments this week brings.