Intro
The Japanese yen was the strongest currency last week, rising 1-1.4% against the euro, Swiss franc, and Canadian dollar. This changes my bias to neutral for JPY. The Australian central bank kept the interest rate unchanged.
Meanwhile, its neighbouring bank in New Zealand is expected to slash by 25 bps, which would add further to our bearish bias.
Other than this news, the other fundamental events are less impactful. So, it should be a smooth-sailing week, where we should be worried more about the technicals.
So, let’s dive into the sentiment ratings for the major currencies this week.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
The Fed cut 25 bps last month and signalled scope for more easing this year as labour momentum softened; markets now handicap another move but a U.S. data blackout from the government shutdown muddies visibility.
With core PCE still sub-3% and the policy bias tilted to support, yield differentials look set to compress against the dollar unless a risk-off shock intervenes.
Key news to watch: Initial Jobless Claims on Thursday
Euro (EUR): Neutral
The ECB held at 2% on September 11, framing policy as “in a good place” while watching tariffs and growth risks. With the August HICP at 2.1% and core inflation easing, the bar for near-term cuts is higher than the Fed’s, leaving the euro supported on dips by relative policy.
British Pound (GBP): Neutral
The BoE’s Aug 7 cut to 4.00% (5–4 vote) kicked off a cautious easing cycle, but sticky UK inflation has since led major houses to push back expectations for rapid follow-ups. That mix caps topside yet supports GBP on pullbacks as the Bank signals it will move slowly.
Japanese Yen (JPY): Neutral
BoJ Governor Ueda kept markets guessing last week, citing global uncertainty even as inflation runs above target; Japan’s leadership change adds a fresh layer, with talk that hikes could slip into 2026 under a more pro-stimulus PM.
The path to narrower US–Japan spreads is intact if the Fed cuts further and BoJ nudges forward (constructive for JPY from weak levels).
Australian dollar (AUD): Neutral
The RBA held at 3.60% on Sept 30, warning Q3 inflation may print hotter after August CPI re-accelerated to 3.0% y/y; that keeps near-term easing on ice. Without a durable China/commodities upswing, AUD strength looks tactical rather than trend.
New Zealand dollar (NZD): Bearish
The RBNZ cut the OCR to 3.00% on Aug 20 and flagged scope for more as growth cools, leaving the domestic policy skew easier into year-end. Exports cushion the downside, but an easing bias keeps NZD rallies contained.
Key news to watch: interest rate decision on Wednesday.
Canadian dollar (CAD): Neutral
The BoC cut 25 bps to 2.50% on Sept 17 and said it’s ready to go again if risks rise; softer domestic data drove the move. Oil provides some cushion, and with the Fed easing too, USD/CAD dips find a mild tailwind, but broader risk tone still rules day-to-day.
Key news to watch: unemployment rate on Friday.
Swiss Franc (CHF): Bullish
The SNB held at 0% on Sept 25 after a long cutting cycle and highlighted tariff headwinds to growth; safe-haven demand remains a structural support. Officials are still ready to smooth FX moves, so expect a firm—though not one-way—franc.
Key news to watch: unemployment rate on Monday.
