Intro
The Canadian dollar and Swiss franc were the weakest and strongest currencies last week, respectively. However, the percentage rise/drop (if both currencies were paired) was an okay 0.88%.
Our sentiment ratings remain unchanged for each of these and other major currencies. Expect the same mild environment this week since there are no major news releases. Of course, leave room for a shock, but our fundamental recaps below should guide you accordingly.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
The Fed is openly debating another cut as soon as October (Waller, Musalem leaning that way), while other officials caution the economy may be sturdier than it looks.
The net effect?: easing bias > hiking risk, compressing U.S. rate differentials unless data re-accelerate. Positioning is jumpy, but the policy skew still argues for a softer dollar on rallies.
Euro (EUR): Bullish
The ECB has been on hold at 2% and meeting accounts describe that level as “robust enough” to handle two-sided risks; policymakers only flag a contingency cut if a euro surge or shocks demanded it.
With the Fed closer to easing and Frankfurt patient, relative policy still gives EUR a modest floor on dips.
British Pound (GBP): Neutral
The BoE held at 4.00% in September and—after August’s narrow cut—speakers now argue for slower follow-up easing. The IMF just warned UK inflation risks becoming entrenched, which helps cap the pace of cuts and keeps a cushion under sterling even as growth stays only middling.
Key news to watch: inflation rate on Wednesday
Japanese Yen (JPY): Neutral
Japan’s inflation pulse remains above target (core 2.7% y/y in Aug; wholesale 2.7% in Sep), and the BoJ’s July outlook projected core CPI 2.5–3.0% for FY2025. This keeps further normalization in play. If the Fed cuts while BoJ edges forward, spreads narrow, a tailwind for JPY from weak levels.
Key news to watch: inflation rate YoY on Friday
Australian dollar (AUD): Neutral
The RBA has cut three times this year to 3.60% and held in October, saying it’s data-dependent as monthly CPI turned sticky and the jobless rate ticked up. Markets lean to another cut into Nov/Dec, but without a durable China/commodities upswing, AUD strength still looks tactical rather than trend.
New Zealand dollar (NZD): Bearish
As predicted, New Zealand’s central bank delivered a 25 bps interest rate. The RBNZ’s recent Monetary Policy Statement clearly points toward additional easing down the line to maintain inflation and boost the economy. All of this leaves the kiwi firmly bearish unless a notable global risk-on turn happens.
Canadian dollar (CAD): Neutral
Inflation cooled to 1.9% y/y in Aug, oil has slid (a headwind for CAD), and the BoC says it will focus more on risks heading into its late-Oct decision, with markets leaning to a cut. Net: CAD likely chops with USD and crude, but has a mild tailwind vs USD if the Fed eases first.
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.
