Intro
The British pound and euro continued to be the most bullish currencies among the G8 currencies last week. Meanwhile, CAD, AUD, and NZD were the weakest. My bias is a tad bit bearish this time for the kiwi, considering the upcoming interest rate decision on Tuesday, where a cut is expected.
Otherwise, the sentiment ratings remain the same as with our previous report. However, the devil is always in the details. So, explore them again so you can stay updated on the fundamentals.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
July CPI held at ~2.7% y/y with core ~3.1%, while payrolls slowed sharply (+73k, unemployment 4.2%), tilting the Fed toward easing as soon as September. While the FOMC left rates on hold last month, Fed officials have since signalled the door is open to fall cuts.
The mix of cooling labor, inflation near target, and a Fed ready to pivot keeps the dollar on the back foot, barring a risk-off shock.
Key news to watch: Initial Jobless Claims on Thursday.
Euro (EUR): Bullish
The European Central Bank has stated that inflation is broadly consistent with its target, while wage pressures are easing. Policy can stay steady unless growth sours. Short-term swings from trade headlines aside, a patient ECB with inflation near 2% leaves the euro with a slight fundamental tailwind vs. a Fed tilting to cuts.
British Pound (GBP): Neutral
The Bank of England cut the interest rate by 25 bps to 4.00% recently in a razor-thin 5–4 vote. This is, of course, an easing step, but one that still acknowledges sticky service inflation and firm wages. Hiring has softened, keeping the Bank cautious about the pace of any further cuts. Such a blend caps the topside yet underpins sterling on dips.
Key news to watch: Inflation Rate YoY on Wednesday.
Japanese Yen (JPY): Neutral
The BoJ held at 0.5% in late July but upgraded its inflation view and kept the option of resuming hikes alive. Tokyo core inflation and national gauges remain above 2%, and market odds of a 2025 hike are building.
If the Fed cuts while the BoJ edges forward, yield differentials compress, which supports a gradual yen recovery from weak levels.
Key news to watch: Inflation Rate YoY on Friday.
Australian dollar (AUD): Neutral
The Reserve Bank of Australia cut the interest rate to 3.60% last week and downgraded the growth/productivity outlook. While lobs rebounded slightly in July (from 4.3% to 4.2%), China-sensitive commodity demand still argues for a shallow easing cycle. AUD rallies look tactical unless global growth or metals re-accelerate.
New Zealand dollar (NZD): Bearish
Markets expect a 25 bps interest rate cut this Tuesday as inflation sits inside the 1–3% band and unemployment has risen. With domestic momentum soft and policy set to loosen further, NZD is range-bound with a gentle downside skew unless global risk appetite improves.
Key news to watch: interest rate decision on Tuesday.
Canadian dollar (CAD): Neutral
The BoC held the interest rate at 2.75% on Jul 30. July jobs then fell ~40.8k, nudging up odds of a September trim. Oil has no big tailwind, with official projections now seeing Brent sub-$60 in Q4. So, CAD is likely to track the USD and data pulse rather than stage an independent run.
Key news to watch: Inflation Rate YoY on Tuesday.
Swiss Franc (CHF): Bullish
Even after the SNB cut to 0% in June, safe-haven demand has kept CHF firm. Rising sight deposits revived talk of FX operations, but the risk of intervention mostly smooths out trend strength. With global risks still elevated and Switzerland’s inflation subdued, CHF retains a safe-haven premium.
