With Christmas holidays coming, fewer and fewer events remain that can excite the minds of investors in equity and FX markets. Key focus will likely remain on another setback in fiscal talks, despite clear signs of bipartisan support of the latest fiscal proposal from the White House Administration.

On Tuesday, the release of the minutes from the RBA meeting could cause volatility in the Australian Dollar. Commodity currencies are expected to come under pressure next week and AUD will be no exception.

On Wednesday, the Fed meeting in the United States is due, which will be the first public reaction of the US Central Bank to positive news on the vaccine and market buoyancy about recovery in 2021. However, even if the Central Bank doesn’t share the market’s view on vaccine and instead sounds gloomy, this will likely be supportive for risky assets, as the implication of pessimistic central bank stance is more credit easing. The net effect from the meeting is expected to be positive for stocks and negative for USD. It is also expected that the Central Bank leave QE size unchanged (including changing the composition of purchases towards long-term maturity securities) and will retain “lower-for-longer” interest rate forecast.

On Thursday, investors will focus on the CPI in the Eurozone, the Bank of England's interest rate decision, as well as weekly US unemployment data (initial and long-term claims for unemployment benefits). The latter will likely indicate a worsening employment situation in the US due to new layoffs caused by pandemic restrictions.

On Friday, a report on monetary policy from the Bank of Japan, a decision on the interest rate in the Russian Federation and an index of the business climate in Germany from IFO are due which could cause increased price action in JPY, RUB and EUR.