Next week is likely to be extremely volatile, as investors will put under great scrutiny the meetings of three major central banks - the US, Great Britain, Japan and Switzerland. Swift recovery of economic activity in all four economies exert pressures on interest rates and stoke inflation (though at various extent) which raises the question about when and how the extraordinary monetary support should be discontinued or at least reduced. Without a doubt, the Fed meeting will have the most market impact. Last week, investors were already starting to factor in the November or December change in the Fed's policy, but strong retail sales gave hope for a change as early as September. The latter outcome is less likely and least priced in, so the dollar may come under pressure if the outcome of the meeting turns out to be the one that was most expected by the market.

As for the Bank of England, it should have a tough time to stick to its hawkish line in light of very weak retail sales in August. Otherwise, the economic data for the UK are quite encouraging, but the Central Bank may prefer a cautious rhetoric at the meeting, which in turn may limit the growth of the British currency.

The Bank of Japan is least likely to pare down stimulus due to low inflation expectations of Japanese households, which exacerbate the problem of bringing inflation to the target. However, QE tweaks towards reduction of asset purchases, which are rumored in the markets, will likely offer some support to the Japanese currency.