The dollar has held up better than in past shutdowns as ex-US political shocks, including Takaichi’s LDP win and Lecornu’s resignation, shifted pressure onto JPY and EUR, muting the usual USD drag. Positioning around US equities is a two-edged risk: mounting caution raises the threat of a correction and USD-negative outflows, but the rise in FX-hedged foreign inflows should blunt that channel. With key releases curtailed by the shutdown, Fedspeak and the Beige Book will dominate the tape; the longer Washington’s impasse persists, the greater the growth hit and the likelier a progressive USD headwind. Near term, that argues for a range-bound but wobblier dollar: resilient while foreign politics and hedging dynamics absorb shocks, softer if shutdown duration and data void start to erode confidence and revive cut-pricing.

The loonie heads into the long weekend on a relatively firmer footing after a clearly stronger jobs report flipped the script: unemployment ticked down to 7.1% against 7.2% expected and employment surged +60.4k vs +2.8k forecast, helping CAD appreciate ~0.19% on Friday and knocking USD/CAD off fresh highs. The upside surprise should pare back the ≈60% odds of an October BoC cut and temper expectations for front-loaded easing, narrowing rate-differential headwinds and making the 1.35–1.40 range’s upper end harder to sustain near term. The Trump–Carney meeting offered no trade breakthrough and doesn’t change the broader setup, but with labour momentum stabilizing, the currency has room to consolidate gains so long as follow-on data don’t relapse and BoC rhetoric leans patient rather than pre-committing to additional cuts.

The euro is stabilizing after an acute selloff sparked by French PM Sébastien Lecornu’s shock resignation, but political risks remain elevated: coalition arithmetic is fluid, policy cohesion on contentious items is uncertain, and a new cabinet must draft and submit the 2026 budget to the National Assembly by 13 October, tight timing that keeps fiscal credibility in focus. Near term, the balance of risks stays skewed to the downside as markets parse German ZEW, the final September euro-area CPI, and a heavy slate of ECB speakers for confirmation that growth is not slipping further even as inflation hovers near target. Any signs of fragmented governance in Paris, softer German sentiment, or cautious ECB rhetoric would likely cap rebounds; conversely, a credible French cabinet/budget path and firmer survey data are the ingredients needed to ease risk premia and stem euro weakness.

Sterling slipped against a resurgent USD but outperformed the euro as markets judged France’s escalating political risk a bigger near-term drag on EUR than on GBP, keeping EUR/GBP biased lower, even as the same episode underscores the UK’s own fiscal vulnerabilities, a headwind for GBP/USD. Into next week, the balance hinges on high-grade UK releases including August GDP and labour market, and a dense slate of BoE speakers that will shape expectations for the timing and pace of further easing. A firmer data pulse paired with less-dovish rhetoric would most cleanly lift GBP versus EUR; by contrast, softer prints or a more accommodative MPC tone would likely weigh more versus the dollar, especially if global risk sentiment stays fragile and France’s political saga keeps EUR risk premia elevated.

The yen’s outlook has weakened after Sanae Takaichi’s surprise LDP victory, with Sane-nomics (expansionary fiscal, looser monetary bias) seen delaying BoJ hikes, boosting the Nikkei, and steepening the super-long JGB curve, all yen-negative. Authorities are trying to slow the move: Finance Minister Kato warned against rapid one-sided FX swings and Takaichi disavowed pursuing a weak currency, which may temper but not reverse pressure. Near-term direction hinges on BoJ signalling and data: markets price only ~20% odds of an October hike, so remarks from hawkish voter Naoki Tamura and Deputy Governor Shinichi Uchida will be pivotal; clearer hike guidance and firmer wage/price traction would support the yen, while continued policy-easing expectations and fiscal expansion risks would keep it on the defensive.

The franc firmed on classic safe-haven flows as French political turmoil flared, gold notched fresh highs, and the US shutdown dragged on. A more structural watchpoint is Japan: Sanae Takaichi’s LDP win and ensuing yen weakness may revive JPY’s role as a long-run funding currency, introducing competition to the CHF’s sole funder status but that would only bite if global uncertainty recedes. Domestically, the SNB’s September FX reserves rose by about CHF 11bn, likely reflecting mark-to-market gains rather than stepped-up FX purchases. The near-term Swiss calendar looks low impact: another negative producer-price print should be shrugged off, while updated government forecasts are set to acknowledge a tougher backdrop, especially from US tariffs on Swiss imports, leaving CHF supported by cautious risk appetite.

Yuan softened modestly post–Golden Week despite a firmer fix, as a sturdier USD outweighed supportive policy signals.Beijing’s incremental easing skew, ¥500bn policy-bank funding, deeper HK bond-market plumbing, and draft rules to smooth cross-border CNY flows, adds credibility to a managed-firm stance but won’t trump near-term growth data. Tactical read: bias for a contained, policy-guided range unless US data reprice the dollar or China’s high-frequency prints gap lower. Next 3–5 days: watch the PBOC midpoint vs models, post-holiday retail/FAI/industrial/trade, rollout of HK market measures and bank cross-border quotas, and US CPI/labour/Fed rhetoric. Faster policy execution + steady data = gently firmer CNY; softer data + stronger USD = gradual slippage contained by a tighter fix.

The rupee spent the week pinned near record lows but in a tight 88.67–88.81 band, finishing marginally firmer around ₹88.69 as likely RBI dollar sales and softer crude helped cap upside in USD/INR; the Bank continues to lean against moves near ~88.80 in spot and NDF. Reserves slipped just below $700bn amid softer FX assets, while hefty September FPI outflows and US tariff/visa headwinds keep pressure intact. Views are split on valuation, but the RBI’s expansion of SRVA use, allowing surplus INR to flow into corporate debt, aims to deepen rupee markets and support inflows; tactically, a clean break above ~88.80 risks further weakness, while sub-88.50 would allow a modest INR bounce, with crude swings and the broader US dollar tone as key swing variables.

Still capped by deteriorating risk sentiment from the US shutdown, keeping AUD/USD below 0.6650 and vulnerable if 0.6500 breaks. China’s return could lean soft as earlier front-loading unwinds. Domestically, RBA speakers including Bullock should stick to data-dependent messaging. The Minutes and the labour report matter more, especially for gauging whether the Board is as hawkish as the statement sounded. Bullock has flagged rising unemployment as the one thing that could keep cuts coming even if inflation surprises higher; with job ads easing and layoff anecdotes mounting, any quick move would see markets re-price easing and weigh on AUD. Base case: still one more 25 bp cut, rallies remain tactical until 0.6650 clears on a risk-positive tape.

The 50 bp RBNZ rate cut hit the kiwi, but the statement’s framing, including temporary Q2 drags, insurance against household/business caution, wasn’t aggressively dovish, and key technicals held. That keeps the door open for a medium-term base if growth improves as flagged. Near term, shutdown-driven risk fatigue caps upside, while China’s trade/inflation prints are a swing factor. With no MPS alongside the cut, Chief Economist Paul Conway’s speech is pivotal for guidance on the OCR path and how quickly policy moves “into stimulatory territory.” A steady message that preserves optionality but acknowledges improving activity would help limit further NZD downside.

Mexico’s decision to delay and review sweeping tariff hikes on 1,500 lines removes an immediate MXN headwind, even as the risk lingers in sentiment and risk premia. Banxico, having cut to 7.50%, signaled openness to further easing, but a recent tick-up in inflation narrows room to cut and puts a premium on incoming prints and minutes. Multilateral forecasts point to only modest growth improvement into 2026, keeping the policy trade-off delicate. Near term, watch tariff negotiations, Banxico guidance and minutes, inflation trends, and the US dollar/rates backdrop; supportive carry and stable risk appetite can cushion MXN, while reintroduced broad tariffs or a firmer USD would re-open downside.