Intro
As predicted, last week was composed, a stark contrast to the one prior. Despite our bearish bias on USD, it was surprisingly the strongest major currency, followed by CHF and EUR. NZD was the weakest, which changes my previous ‘neutral’ rating to ‘bearish.’
We’re almost at the start of a new month, meaning it’s time for Non-Farm Payrolls. Aussie traders should check out the interest rate decision. Apart from these events, no other high-impact news is expected to occur.
Nonetheless, let’s look at each of the sentiment ratings for the major currencies in more detail this week.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
The Fed cut 25 bps on Sept 17 to 4.00–4.25% and signalled scope for more easing this year as labour risk rose; one governor even dissented for a larger move. August data show firm consumer spending even as the jobs pulse has cooled, a mix that trims yield support for the dollar unless inflation re-accelerates.
Key news to watch: Initial Jobless Claims on Thursday; unemployment rate and Non-Farm Payrolls on Friday
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 first 25 bp cut (Aug 7, 5–4) signalled a cautious easing cycle, not a rush. Markets still debate the timing of the next step. August CPI at 3.8% (services 4.7%) keeps inflation sticky enough to cap aggressive cuts, supportive on dips but limiting topside.
Japanese Yen (JPY): Bearish
Bank of Japan minutes show some policymakers backing future hikes, and August core CPI at 2.7% plus Tokyo core holding above 2% in September keep normalisation hopes alive. If the Fed keeps cutting while the BoJ edges forward, the rate gap narrows and JPY’s macro balance improves from weak levels.
Australian dollar (AUD): Neutral
The RBA cut 25 bps on Aug 12 but sticky monthly inflation (July 2.8% y/y, Aug 3.0%) and a softer labour pulse (August jobs fell; unemployment 4.2%; vacancies easing) argue for patience near term. AUD remains a China/commodities beta. Rallies look tactical unless metals and Chinese demand re-accelerate.
Key news to watch: interest rate decision on Tuesday.
New Zealand dollar (NZD): Bearish
The RBNZ cut the OCR to 3.00% on Aug 20 and flagged it can ease again as growth softens; unemployment rose to 5.2% and inflation sits at 2.7%, the target. With policy drifting more easily and domestic momentum subdued, NZD stays range-bound with a mild downside skew.
Canadian dollar (CAD): Neutral
The BoC cut 25 bp to 2.50% recently after inflation eased and jobs deteriorated. Markets see room for another trim. Oil provides some cushion, and with the Fed easing too, USD/CAD downside has a mild bias (though broader risk tone still rules).
Swiss Franc (CHF): Bullish
The Swiss National Bank held at 0% on Sept 25 after multiple cuts, citing tariff headwinds and a soft growth outlook; inflation remains very low. Safe-haven demand persists, but the SNB’s readiness to smooth FX moves argues for a steady, not runaway, franc.
