The US dollar heads into a pivotal week almost a year into the current easing cycle, with the Fed widely expected to cut 25 bp while signalling less accommodation than markets price. Attention will center on the dot plot and staff projections, which could stress a still tight labour market and sticky inflation. A hawkish cut would likely force a reassessment of overly dovish expectations, halt the recent convergence in rate outlooks between the US and the rest of G10, and lend the dollar support, especially after the USD’s earlier sell-off exceeded what the slide in its rate and yield advantage would imply. Beyond the FOMC, retail sales and July TIC data will be key cross-checks on demand and foreign appetite for US assets as fading reserve-currency fears remove a recent headwind. Baseline view points to USD stabilization around current levels in the coming months if relative growth and policy settings remain supportive.

Canadian dollar has ground lower this month with August’s peak now in view, as the loonie lags other commodity FX despite a tentative oil rebound after OPEC+ moved to return supply. The drag stems from a bleak labour print that showed a further 66k drop in employment against a 5k gain expected and a rise in unemployment to 7.1 percent, which pushed markets to nearly fully price a BoC cut on Wednesday. A first 25 bp reduction in six months may have a muted currency impact since the path toward the lower end of neutral is largely priced. The August CPI release, due just over an hour before the decision, should have limited sway, with the BoC likely to keep a cautious tone that preserves the option of further easing. Until October, scope for extra dovishness looks constrained, suggesting the rally could find it harder to extend, with short-term fair value signals acting as an anchor. Risks are two-sided in the near term, where a sturdier policy message or firmer data could spark a CAD bounce, while softer guidance or growth concerns would keep USD/CAD supported.

Expected weekly trading range:

1.36 - 1.40

The euro faltered this week, unable to build on its early rebound even though the ECB outcome prompted markets to scale back easing bets. That nerves resurfaced after hostile drones entered Polish airspace and with France’s political and fiscal outlook back in focus following the appointment of Prime Minister Sébastien Lecornu. Much of the policy-convergence upside is already in the price, and the market still looks too dovish on the Fed, which leaves the single currency vulnerable if US rate expectations are repriced higher. Into next week the calendar is light, so market tone may be set by the German ZEW survey, the final August EU inflation print, and a dense slate of ECB speakers. Any cautious rhetoric from policymakers or fresh geopolitical headlines likely caps rallies, while a firmer ZEW, stickier inflation, or a pushback against aggressive Fed-cut pricing would be needed to unlock meaningful topside for the EUR.

Expected weekly trading range:

1.59 - 1.64

Sterling is still nursing scars from the early-September gilt selloff, leaving it neck-and-neck with the euro as Europe’s laggard this month, but the fiscal scare has faded and is unlikely to morph into sovereign credit concerns. With inflation expected to peak in September, the BoE is set to keep Bank Rate unchanged next week despite softer activity data, and markets will parse both the policy statement and the vote split for signals that the easing cycle remains on track. In the run-up, attention will center on CPI, labour market and retail sales prints that will shape the starting point for any 2024–25 rate-cut path. Barring notable data disappointments or an unexpectedly dovish turn from the MPC, the oversold currency has room to stabilize and grind higher as sovereign risk premia subside after the gilt shock, while a cautious but credible easing message from the BoE could further support sentiment by anchoring near-term rate expectations without reigniting fiscal fears.

Expected weekly trading range:

1.85 - 1.91

The yen remains under pressure despite a backdrop that normally favours safe havens, as Japanese politics eclipse global cross-currents: rising odds of Sanae Takaichi winning the 4 October LDP leadership and reviving Abenomics raise dual risks that the government leans on the BoJ to delay further tightening and that long and super-long JGBs sell off on fiscal sustainability concerns. BoJ could still hike this year offered brief support, but near-term direction hinges on the Fed and BoJ decisions and on shifting election math. A hawkish 25 bp Fed cut would likely weigh on the yen, while next week’s BoJ meeting is seen as a placeholder that sets up October as a live window for another move. Fresh inflation data on the morning of the meeting are expected to decelerate across headline, keeping an October hike in play yet leaving the currency sensitive to any shift in Fed repricing or leadership-race probabilities.

Expected weekly trading range:

105.05 - 108.25

The franc has firmed as political and geopolitical nerves push investors toward safety, even as broader risk markets stay orderly, and near-term performance should track risk-on/off while Europe digests the fall of French PM François Bayrou, budget uncertainty, and snap-election risks, alongside heightened NATO vigilance after drones entered Polish airspace. Domestically, SNB President Martin Schlegel reaffirmed that the bar for reviving negative rates is high, and the SNB will begin publishing a summary of its monetary policy discussions four weeks after each meeting. The data calendar is light and not franc-moving on its own, with another weak producer-price print offering little CPI guidance. In this backdrop, safe-haven demand keeps the bias for a firm franc unless global risk sentiment improves decisively or SNB communication turns softer.

Expected weekly trading range:

0.57 - 0.59

China’s currency backdrop looks steadier but policy sensitive: the PBOC’s draft rules to tighten oversight of cross-border yuan financing should deepen offshore liquidity and bolster credibility around capital-flow management, while a run of stronger daily fixings and a stable USD/CNY near 7.12–7.13 signal an intent to anchor expectations without spending the policy toolkit. The near-term dilemma is timing more support for a slowing economy as an expected Fed cut approaches, since over-easing risks yuan pressure and moral hazard. Into the next few days, focus falls on August CPI and PPI for inflation momentum, PMI for growth pulse, and the credit impulse. Any combination of softer inflation, firmer activity, and resilient credit would give the PBOC room to lean on targeted liquidity and guidance while keeping the fixings firm. Conversely, weak data alongside a hawkish Fed cut that pushes back on aggressive easing bets would test yuan stability and likely prompt heavier use of the counter-cyclical factor or liquidity operations rather than headline rate moves.

Expected weekly trading range:

5.07 - 5.23

The rupee hit a lifetime low near 88.36 per USD before trimming losses into weekend, pressured by new US tariffs on Indian goods, strong importer demand for dollars, and persistent foreign portfolio outflows, with a brief lift from a softer USD and firmer local sentiment. Reserves ticked up to roughly $698.3 billion, offering a modest backstop. In the days ahead, direction hinges on the Fed outcome. Tariff headlines remain the most immediate swing factor, especially for export-sensitive sectors. Domestically, the government’s consumption tax reductions aim to cushion demand while the RBI continues to lean against excess volatility through dollar sales without defending a line-in-the-sand level. Implied volatility has eased, but risks from tariff uncertainty, ongoing importer dollar needs, and FPI outflows keep the balance of risks skewed toward choppy, range-bound trading rather than a clean reversal.

Expected weekly trading range:

62.80 - 64.72

Support has come from a friendlier China tone linked to the local AI boom, softer USD/CNH, and rising Fed-cut bets, alongside a less-dovish RBA and firmer Australian data that have trimmed market expectations for near-term rate cuts. Near term, international events may cap upside. China’s cyclical data are expected to stay weak, further USD/CNH declines still depend on broader USD softness, and a hawkish 25 bp Fed cut plus European political noise could lend the dollar fresh support. Domestically, leading indicators point to resilient employment that should keep joblessness below the RBA’s 4.3% forecast. Ahead of the labour release, remarks from Assistant Governor Sarah Hunter are likely to keep policy data dependent, note improving household consumption, and play down the recent monthly CPI spike. Market pricing for additional cuts looks too aggressive, which should limit downside risks and keep dips shallower.

Expected weekly trading range:

0.91 - 0.93

The backdrop of improving sentiment toward China and rising Fed-cut expectations has aided risk FX, but the kiwi has lagged as a more dovish RBNZ weighs. External events could still constrain gains next week if China data undershoot and the Fed delivers a hawkish 25 bp cut that the market has not fully internalized. The domestic swing factor is GDP, which risks surprising to the upside. A positive print would challenge the premise behind the RBNZ’s recent dovish tilt, reduce the likelihood of an OCR trough around 2.50%, and pare expectations for two further 25 bp cuts. That repricing would provide a cleaner path for NZD stabilization and a modest recovery, provided global risk sentiment does not deteriorate.

Expected weekly trading range:

0.81 - 0.83

The peso looks set for a steady but headline-sensitive week. A proposed tariff reform that targets imports from countries without trade deals could lift fiscal revenue, which is mildly supportive for risk premium, but higher input costs for autos and manufacturing could add to inflation and cap gains. The draft budget’s stronger growth band of 1.8% to 2.8% for 2026 and an inflation track back to 3.0% are constructive if markets judge the assumptions credible and Pemex support manageable. Near term, the balance turns on inflation trends and Banxico signals, with sticky prices keeping policy restrictive and softer prints inviting talk of cuts. Watch industrial production, services and PMI for confirmation of momentum. External drivers remain pivotal, including the path of the US dollar, Fed communication and broader risk sentiment. Base case is range-bound trading with a slight support bias if fiscal discipline is reinforced and domestic data hold up.

Expected weekly trading range:

13.12 - 13.52