The dollar’s recent resilience, driven by elevated ex-US political risk (France/Japan) and the mechanical support from unwinding legacy short USD positions and firmer forward demand, now meets a softer CPI print that trims the odds of a hawkish cut and nudges rates and the USD lower on the day. Into the October Fed, a 25 bp move with non-committal, data-dependent guidance is likelier than an explicit pushback against dovish pricing, especially with the shutdown-thinned data slate; but if officials stress that growth and the labour market aren’t rolling over, the downside in the dollar should remain limited. Net: CPI softness argues for a tactical USD pullback, yet the broader backdrop, foreign political risk, still-elevated cut pricing to fade, and positioning dynamics, keeps the medium-term skew tilted toward consolidation rather than a sustained USD slide.

The loonie has firmed back near 1.40 but the CAD’s own backdrop is mixed: headline CPI popped back above 2% with core still sticky north of 3%, arguing for caution, while the BoC’s Business Outlook Survey showed only a modest sentiment uptick and softer pricing intent from a low base. Markets and surveys lean heavily toward a back-to-back BoC cut next week, yet the case is closer to 50/50 given the inflation surprise. Trade noise isn’t helping as deal chatter was knocked down by Ottawa before Washington abruptly froze talks, so any improvement may have to wait for the APEC optics. Net, CAD near term hinges on whether the BoC skips to preserve optionality or validates market pricing; even if the Bank cuts, guidance that raises the bar for going below ~2.25% could limit CAD downside by tempering expectations for a deeper cycle.

The euro remains pinned near its weakest since July as a softening Eurozone growth pulse drags both EUR sentiment and European bank equities, two markets that have moved in tandem. Near term, headwinds persist if cyclical worries linger and equity outflows from Eurozone banks continue. The ECB is widely expected to hold rates and leave its baseline little changed, but any nod to weaker activity or rising external drags from US–China trade tensions on European manufacturing would keep EUR rallies shallow. Beyond the meeting, advanced Q3 GDP, preliminary HICP, and the October IFO will set the tone; with some long EUR positioning already trimmed, the single currency still looks vulnerable to negative surprises and likely needs a run of firmer prints to shake off the current malaise.

Softer-than-expected September CPI confirms price pressures are easing, aligning with the BoE’s narrative and offering relief to policymakers, gilt buyers, firms, and households, even if sterling’s knee-jerk weakness reflected a front-loading of cut bets. With roughly 60 bp of easing priced by end-2026, many BoE-related negatives already seem embedded, and GBP screens oversold versus both EUR and USD. The near-term test is data: upside surprises in today’s retail sales and October flash PMIs, followed by next week’s BoE lending figures and speeches, would help steady sentiment and shorten the currency’s underperformance; absent that, GBP likely stays range-bound but with asymmetry skewed toward stabilization as stagflation fears fade.

The Takaichi trade is meeting resistance: the Nikkei is stalling below 50,000 as investors await concrete fiscal plans and watch US–China tensions, while the US–Japan short-rate gap may not widen much with markets already aggressively priced for multiple Fed cuts and only a modest delay to the next BoJ hike. Three catalysts will set the near-term yen path: (1) the Trump–Xi meeting—failure to de-escalate likely dents global equities and, via a weaker Nikkei, pulls the pair lower despite generic risk-off dollar support; (2) the FOMC, any hawkish cut/hold that resists endorsing four more cuts would stiffen US yields and lift JPY; and (3) the BoJ, no move is expected, but fresh forecasts and Governor Ueda’s tone are pivotal.

The franc stays firmly bid as global duration rallies and lower developed-market long yields compress CHF’s carry disadvantage, leaving it largely indifferent to gold’s pullback and pushing its real effective value toward the strongest since 2011. With CHF skirting last November’s decade highs, investors are increasingly using the franc as a portfolio hedge, even as the SNB signals a low tolerance for additional strength: weekly sight deposits will be parsed for hints of FX operations, and the inaugural minutes offered no fresh guidance on valuation thresholds or intervention triggers. Net read: acute global risks keep CHF demand elevated, but the SNB’s resolve likely caps near-term upside; absent a full-blown risk-off episode, some cooling in the franc should follow.

Yuan opened the week steady in offshore trade as markets awaited on US inflation prints and US–China talks, with the PBOC reiterating a basically stable currency alongside calibrated, growth-supportive policy. Domestically, active fiscal support helps cushion growth, while incremental internationalization broadens structural demand for CNY. Near term, watch the daily fix versus model estimates, the USD impulse from US data, and China’s high-frequency reads on retail sales, industrial output, trade, and FAI; a stronger dollar or softer domestic data would bias USD/CNY higher, while a firmer-than-expected fix and constructive bilateral headlines should anchor or gently firm the yuan. Base case: policy-guided range trading, with dips supported by fix discipline and reforms, and rallies capped by global dollar strength until growth momentum clearly stabilizes.

The rupee has edged to its strongest since late August, a notable outperformer amid broad dollar strength, helped by RBI dollar-selling and improved sentiment around a prospective US–India trade thaw. The backdrop remains fragile: foreign portfolio outflows persist, net FDI recently dipped negative, and tariff uncertainty still hangs over exports, while swings in crude can quickly lift importer USD demand. Near-term durability will hinge on the RBI’s intervention cadence, the tone of trade headlines, and the global USD path into key US data; firm domestic equities and steadier capital flows would extend gains, whereas a stronger dollar or renewed outflows would cap them and push INR back into its recent range.

Global risk remains the cap: the US shutdown and fraught Trump–Xi meeting setup keep AUD rallies fragile, with a hawkish cut from the Fed next week an added headwind via higher US yields and softer risk. Domestically, pricing wobbles around a November RBA cut after a hot monthly CPI but a jump in unemployment above the RBA’s path. Governor Bullock’s last remarks before blackout should lean data-dependent, leaving next Wednesday’s quarterly CPI as the decider: an in-line or only slightly above-forecast print would likely green-light a 25 bp cut, while a clear upside surprise could stay the Board’s hand. Near term, AUD trades headline-to-headline; topside requires calmer US–China signals and a benign Fed.

The same global overhangs curb upside, and a more hawkish-than-priced Fed outcome would weigh via rates and risk. Locally, attention turns to business confidence as a litmus test of whether the RBNZ’s 50 bp jolt is lifting animal spirits; a rebound would support the idea that easing is gaining traction and help the kiwi base, while persistent pessimism would argue for a slower handoff from policy to activity. With external risks elevated and the US event risk front-loaded, NZD performance hinges on improved domestic sentiment and no fresh escalation on the US–China front; otherwise, bounces likely fade into supply.

The peso started the week a little softer on balance, but still underpinned by carry appeal and hopes for easier US policy; headwinds stem from broader risk jitters (US–China trade headlines, shutdown risk) and the prospect of more Banxico easing that could narrow the yield gap. With inflation broadly within target, policy flexibility persists, so MXN direction hinges on the US data/US-dollar impulse and Banxico tone: firmer US prints or dovish Banxico would pressure MXN, while softer US data or steady-hawkish local guidance would help. Tactically, 18.50 is topside risk if momentum turns against the peso; support sits around 18.20–18.30 so long as carry inflows hold and external shocks are contained.