Central Bank of Egypt
Egypt is seeing upward pressures on inflation like Indonesia and so the central bank may add to last year's 100 bps hike. REUTERS

South Korea and four emerging market economies are scheduled to review their monetary policies next week and the eurozone is widely expected to announce more stimulus measures, while the Fed is looking for more reasons to start hiking rates in the near future.

Indications from the US and the eurozone are crucial for others, especially with the dollar rallying to a 12-year high versus a basket of majors recently also weighing on the rest of the forex world.

South Korea, facing deflation risks, is likely to consider another cut in the benchmark interest rate, adding to the 50 basis points reduction in 2014. The Bank of Korea base rate now stands at 2% and the review will be on Thursday.

Indonesia, on the other hand, is seeing inflation rising and therefore, the bias is for upward adjustment in the discount rate. But analysts do not expect a change immediately as Bank Indonesia has done with a 25 basis points hike in November, taking the official rate to 7.75%.

Egypt's case is similar to Indonesia's as both the economies have recently cut fuel subsidies and hiked interest rates to curb inflationary pressures stemming from the same.

The Central Bank of Egypt hiked the overnight deposit rate, which is the benchmark rate, by 100 basis points to 9.25% and has since left it unchanged. Indonesia and Egypt too review rates on Thursday and the consensus is for no change while the bias remains upward.

The National Bank of Poland meets to review rates on Wednesday and the bias is for a cut with the country seeing disinflation trend in line with most of its peers in the region. The NBP had slashed the discount rate by 50 basis points to 1.75% last year where it stands now.

With the eurozone set to expand its quantitative easing, other European countries are widely expected to follow suit. Romania has cut the benchmark rate by 25 basis points last week.

Chile will set rates on Friday and the Central Bank of Chile is now in a rate cutting cycle with inflation in decelerating trend. It has cut the overnight interbank interest rate, the main signal rate, 150 basis points in 2014, taking it to 3%.

The inflation rate continued to fall in December and analysts do not rule out additional downside adjustments though not sure about a cut this month itself.

Other than rates

The labour market conditions index released by the Federal Reserve and the Beige Book are two US central bank events other than rate decisions Russian central bank's reserves data will also be crucial as the rouble has fallen sharply of late.

The Beige Book will give a picture of the overall US economic growth while the LMCI will show the health of the US jobs market.

Also, Atlanta Fed's president Dennis P Lockhart will speak at a function on Monday covering topics like the US economy and the US dollar. His remarks may determine a short-term trend in the greenback.