The week ahead is likely to bring elevated market volatility, courtesy of impactful and high-risk events on the economic calendar, including US inflation data, UK GDP figures, and significant monetary policy announcements from the FOMC, the Bank of England and the European Central Bank. Against this backdrop, precious metals, stocks and currency pairs, such as USD/JPY, EUR/USD and GBP/USD could experience large swings, creating interesting trading opportunities.

Traders should keenly monitor the U.S. inflation report to assess the validity of prevailing interest rate expectations for the upcoming year. Although price pressures are projected to continue to cool, progress towards the Fed's target is likely to be limited, a situation that could reduce the likelihood of the Federal Reserve adopting a more pessimistic stance at its December meeting.

In terms of the central bank announcements, the Fed, ECB and BoE are seen holding their policy settings steady. For this reason, it is vital to pay close attention to their forward guidance and projections.

With growth flagging in both the Eurozone and the UK, there is little appetite for Lagarde or Bailey to be aggressive in their outlook. Powell, however, may have room to be somewhat more hawkish, given the remarkable resilience of the American economy. This may leave the U.S. dollar well positioned to extend its recovery against its major peers, such as the euro, British pound and the Japanese yen, to name a few.

In the event of a US dollar rally resulting from a resurgence in Treasury yields, gold (XAU/USD) and silver (XAG/USD) are likely to suffer. Risk assets could also come under pressure, sending the Nasdaq 100 sharply lower. For a thorough analysis of the forces that may shape financial markets and drive volatility in the coming days, consult DailyFX's meticulously prepared week-ahead forecasts.