The Canadian dollar weakened past 1.375 per US dollar in September after the Bank of Canada cut its policy rate by 25 basis points to 2.5% and signalled a durable easing campaign. The move reflected a sharper slowdown in activity than earlier anticipated, including a 1.6% contraction in second quarter GDP and a 27% collapse in exports. Labour market deterioration reinforced the case for easier policy, with net job losses and unemployment rising to 7.1% in August, which reduced wage pressures and removed urgency from the inflation narrative. Consumption and housing remain relatively resilient, but the Governing Council warned that trade barriers and slowing population growth will gradually weigh on private spending and the labour market. With headline inflation at about 1.9% markets judged that there was room to loosen policy without jeopardising the 2% target.

Canadian Dollar Gives Up Montly Highs

The South African rand drifted toward 17.4 per USD, down from recent ten-month highs of 17.3, pressured by softer precious metal prices despite a subdued dollar. Market attention is on central bank decisions this week, particularly from the Federal Reserve and the South African Reserve Bank. The US central bank is widely expected to resume its easing cycle today with a 25-basis-point rate cut, with further cuts likely to follow. In South Africa, August inflation came in at 3.3%, within the Reserve Bank’s target range of 3%-6%, yet the MPC is expected to maintain a hawkish tone.

South African Rand Weakens Slightly

The euro stabilized just above $1.18, holding close to its strongest level since September 2021, as investors awaited the US Federal Reserve’s policy announcement and updated economic projections due later today. Markets broadly expect the Fed to cut rates by at least 25 basis points and signal further easing, as policymakers weigh a cooling labor market against lingering tariff-driven inflationary pressures. European officials, by contrast, continue to stress caution. ECB executive board member Isabel Schnabel urged policymakers to “keep a steady hand,” citing risks from tariffs, services inflation, food prices, and fiscal policy. Slovak central bank governor Peter Kazimir echoed the warning, saying it would be “a mistake” to downplay these risks. The ECB last week kept borrowing costs unchanged for a second straight meeting, signaling its rate-cutting cycle may be over.

Euro Steadies Near 2021 Highs as Fed Decision Looms

The British pound held above $1.363, close to its highest in over ten weeks, as traders awaited key central bank decisions. The Bank of England is expected to leave rates at 4% on Thursday while slowing its £100 billion annual bond unwind. The latest data showed that UK inflation remained at 3.8% in August, as expected and matching the 18-month high recorded in July. Additionally, job data showed steady unemployment at 4.7%, wage growth of 4.8% excluding bonuses (4.7% including bonuses), and a slight payroll decline of 8,000, all broadly in line with forecasts. BoE rate-cut bets were little changed, with markets pricing only a one-in-three chance of a move by December. Meanwhile, the US Federal Reserve is widely expected to cut rates by 25 bps today, with traders anticipating at least two more reductions by the end of 2025.

Sterling Holds Near 10-Week High

The New Zealand dollar edged down to $0.597 on Wednesday, halting a two-day advance as traders turned cautious ahead of Thursday’s GDP release. The economy is expected to contract by 0.3% in the June quarter, reinforcing the Reserve Bank of New Zealand’s dovish outlook. Last week, RBNZ Governor Christian Hawkesby reiterated the central bank’s projection for its official cash rate to fall by a total of 50bps by year end, noting the pace of easing would depend on data. Markets currently price in a 25bps rate cut at the October meeting, with rates expected to trend lower toward 2.50% by early 2026. However, losses in the kiwi were cushioned by weakness in the US dollar, as investors anticipate the Federal Reserve will slash rates by 25bps at the conclusion of its two-day policy meeting later today.

New Zealand Dollar Ticks Down Ahead of GDP Data

The South Korean won rose at around 1,380 per dollar on Wednesday, the highest level in about a month as the dollar retreated ahead of the Federal Reserve’s policy decision at the conclusion of its two-day meeting. While a 25-basis-point rate cut is fully priced in, investor attention has shifted to the Fed’s forward guidance and the pace of its easing cycle. On the domestic front, the won drew support from strong trade data as South Korea’s auto exports jumped 8.6% in August to $5.5 billion, a record for the month, driven by robust EV demand in Europe despite US tariffs. Export volumes rose 5.5% to 200,317 units, while cumulative shipments from January to August hit a record $47.7 billion.

South Korean Won Rises on Softer Dollar, Stronger Auto Exports

The Australian Dollar edged lower to around $0.668 on Wednesday, but traded near its highest level since early November last year, as markets monitored the highly anticipated US Fed’s key policy decision. The US dollar continued to struggle as markets fully priced in a quarter-point rate cut by the Federal Reserve this week. However, the bigger focus will be the Fed’s updated dot plot, which could signal how many more cuts may follow amid weak jobs data, sticky inflation, and political pressure. At home, investors await Thursday’s jobs report, expected to show 20K–25K new positions with unemployment steady at 4.2%, a key input for the RBA’s policy path. Markets now assign minimal odds to a September cut, with November easing bets trimmed to 70% on the back of solid recent data. On the geopolitical front, the US and China, Australia's top trading partners, reached a deal to place TikTok under US ownership, with final approval expected in a Friday call between Presidents Trump and Xi.

Aussie Dollar Trades Near 10-Month Peak

The Japanese yen slipped to around 146.6 per dollar on Wednesday after soft trade data reignited concerns over Japan’s export-reliant economy. Exports fell 0.1% in August, less than expected but still the fourth consecutive monthly decline, led by a 13.8% drop in shipments to the US. Imports contracted 5.2%, moderating from July’s 7.4% slide yet surpassing the 4.1% decline forecast by analysts. On monetary policy, the Bank of Japan is expected to keep rates steady at 0.5% as policymakers weigh domestic and external risks, including tariffs. Still, the yen hovered near two-month highs as the dollar softened ahead of the Federal Reserve’s policy decision. The Fed is widely expected to deliver a quarter-point cut later today, with markets pricing in about 67 basis points of easing by year-end.

Japanese Yen Eases Amid Soft Trade Data

The dollar index held around 96.7 on Wednesday, hovering at 2-½-month lows and down about 1% so far this week, as investors geared up for the upcoming Federal Reserve monetary policy decision. The Fed is widely expected to deliver a quarter-point rate cut later in the day, with markets pricing in roughly 67 basis points of total easing by year-end. Those expectations have been underpinned by data showing a cooling labor market, even as inflation remains above the Fed’s 2% target. Investors will also scrutinize the central bank’s quarterly “dot plot” projections for signals on the rate path. On the data front, US retail sales rose in August for a third straight month, posting a broad-based gain that capped a resilient summer of consumer spending. The dollar slipped across major peers, touching a four-year low against the euro.

Dollar Languishes Ahead of Fed Decision

The Japanese Yen touched 146.30 against the USD, the highest since August 2025. Over the past 4 weeks, US Dollar Japanese Yen lost 1.08%, and in the last 12 months, it increased 3.05%.

Japanese Yen Hits 4-week High

The Swiss Franc touched 0.79 against the USD, the highest since January 2015. Over the past 4 weeks, US Dollar Swiss Franc lost 2.53%, and in the last 12 months, it decreased 7.01%.

Swiss Franc Hits 10-year High

EURUSD increased to 1.18, the highest since September 2021. Over the past 4 weeks, Euro US Dollar gained 1.51%, and in the last 12 months, it increased 6.49%.

Euro Hits 4-year High

The Danish Krone touched 6.30 against the USD, the highest since September 2021. Over the past 4 weeks, US Dollar Danish Krone lost 1.46%, and in the last 12 months, it decreased 6.04%.

Danish Krone Hits 4-year High

The Canadian dollar strengthened past 1.38 per US dollar in September, climbing to monthly highs after domestic data reinforced expectations that the Bank of Canada will be cautious about cutting rates. Headline CPI rose 1.9% year-on-year in August—below the 2.0% consensus—but core gauges, notably the trimmed-mean and median, remain close to 3.0%, signaling persistent underlying inflation once volatile items are excluded. Those readings, together with signs of continued economic resilience, imply the BoC can keep policy restrictive for longer and have trimmed the likelihood of a rapid easing cycle; markets now price only a modest 25-basis-point cut at the next meeting rather than a more aggressive path. At the same time, a softer US dollar, driven by Federal Reserve pricing for an imminent 25-basis-point move and further easing this year, has reduced external pressure on the Canadian dollar.

Canadian Dollar Rises to Monthly High

The Swedish Krona touched 9.23 against the USD, the highest since March 2022. Over the past 4 weeks, US Dollar Swedish Krona lost 3.37%, and in the last 12 months, it decreased 9.26%.

Swedish Krona Hits 3-1/2-year High

The Serbian Dinar touched 99.01 against the USD, the highest since September 2021. Over the past 4 weeks, US Dollar Serbian Dinar lost 1.38%, and in the last 12 months, it decreased 5.88%.

Serbian Dinar Hits 4-year High

The Brazilian real strengthened toward 5.3 per US dollar in September, the strongest since June 2024, as the Brazilian labor market showed record strength providing room for restrictive monetary policy, while the US dollar dropped to multi-month lows. Unemployment was 5.6% in the July moving quarter, marking the lowest level since the series began in 2012, with the unemployed population near 6.1 million and employment at a record 102.4 million. The inflation was 5.13% year-on-year in August, a downside surprise that helped shave the inflation risk premium from long-term yields, while the Selic remained at 15%, preserving favorable real interest differentials versus major peers. At the same time the US dollar slipped to a more-than-two-month low as markets priced roughly a 25 basis-point cut at the Federal Reserve’s meeting this week and further easing for the rest of the year, further reducing external pressure on the real.

Brazilian Real at Over 1-Year High

The dollar index fell toward 97 on Tuesday, hitting an over two-month low as the Federal Reserve begins its two-day policy meeting later today. Markets are almost fully priced for a 25 basis point cut this week, with a total of 67 bps of easing expected by year-end. Expectations have been reinforced by recent data pointing to a cooling labor market and subdued inflation despite tariffs. President Donald Trump also urged Fed Chair Jerome Powell to deliver a larger cut, citing weakness in housing. In terms of data, US retail sales climbed in August for the third consecutive month, marking a broad-based increase that capped off a resilient summer of consumer spending. On trade, Trump said Monday that US-China negotiations in Spain were progressing well, with Trump and Chinese President Xi Jinping set to speak on Friday to finalize terms.

DXY Falls to Over 2-Month Low

The Indian rupee remained weaker than 88 per USD, continuously resting record lows of 88.4 since the start of September on the outlook of limited foreign exchange inflows and a dovish RBI. The US maintained its 50% tariff on India and threatened to double the current rate, pleading G7 countries to join, as India continued to import oil and fuels from Russia. This was after PM Modi pushed back and stated that Indian firms buy the most favorable energy in an uncertain economic backdrop. On the monetary policy front, consumer inflation was at 2.1% in August, remaining close to the lower bound of the RBI's inflation tolerance band of 2%. The central bank held rates unchanged in its August meeting and is largely expected to hold on their upcoming October meeting, but the softer inflationary backdrop and growth concerns stemmed from trade restrictions supported the case for another cut this year or next.

Indian Rupee Holds Near Record High

The Swiss franc firmed to around 0.79 per USD, its highest level since July 1st, amid a weaker dollar as speculation about a “dovish cut” by the Fed increases. Traders are pricing in a near-certain 25-bps rate cut, and expect the central bank to continue lowering rates. Persistent political and fiscal concerns in France and Japan, along with geopolitical tensions, also underpin safe-haven demand for the franc. In the Swiss economy, the latest figures confirmed a persistent disinflationary trend. Producer and import prices declined again in August, down 1.8% year-on-year and 0.6% month-on-month. Meanwhile, Swiss CPI rose 0.2% in August as expected, marking the third straight month of positive inflation and remaining within the SNB’s 0%-2% target range. Despite subdued inflation, SNB Chairman Martin Schlegel recently noted the risks of negative rates for savers and pension funds, signaling the bank’s reluctance to cut below zero.

Swiss Franc at Over 1-Month High

The euro climbed above $1.18 for the first time since July, hovering at its strongest level since September 2021, supported by stronger-than-expected investor sentiment in both the Eurozone and Germany, alongside broad dollar weakness as the US Fed prepares to resume interest rate cuts this week. Markets broadly expect the Fed to lower rates by at least 25 bps as policymakers weigh a cooling labor market against lingering inflationary pressures from tariffs. In contrast, European officials continue to emphasize caution on inflation. ECB Executive Board member Isabel Schnabel urged policymakers to “keep a steady hand,” warning that risks ranging from tariffs and services inflation to food prices and fiscal policy remain significant. Slovak central-bank Governor Peter Kazimir echoed that view, cautioning that ignoring these risks “would be a mistake.” The ECB last week kept borrowing costs unchanged for a second consecutive meeting, signaling that its rate-cutting cycle may have ended.

Euro Hits Four-Year High

The British pound rose past $1.363, the highest since early July, as markets awaited a busy week of central bank decisions and UK data. The Bank of England is expected to hold rates at 4% on Thursday while slowing its £100 billion annual bond unwind. UK inflation for August, due Wednesday, is forecast at 3.8% y/y, matching July’s 18-month high, with retail sales to follow later. Latest jobs data showed wage growth excluding bonuses at 4.8% and 4.7% including bonuses, unemployment steady at 4.7%, and payrolls down 8,000, all in line with expectations. The figures indicate a gradually slowing labor market, leaving BoE rate-cut bets largely unchanged, with markets seeing only a one-in-three chance of a cut by December. Meanwhile, the US Federal Reserve is widely expected to deliver a 25 bp rate cut on Wednesday, with traders pricing in at least two more reductions by the end of 2025.

Sterling Rises to 10-Week High

The euro climbed toward $1.18, its strongest level since early July, buoyed by broad dollar weakness as the US Federal Reserve prepares to resume interest rate cuts this week. Markets widely expect the Fed to lower rates by at least 25 basis points on Wednesday, with policymakers weighing a cooling labor market against lingering inflationary pressures from tariffs. In Europe, officials continue to stress vigilance on inflation. ECB Executive Board member Isabel Schnabel said monetary policy should “keep a steady hand,” warning that upside risks—ranging from tariffs and services inflation to food prices and fiscal policy—remain significant. Slovak central-bank Governor Peter Kazimir echoed the concern, cautioning that overlooking these risks “would be a mistake.” The ECB last week kept borrowing costs unchanged for a second straight meeting, signaling that its rate-cutting cycle may have come to an end.

Euro Hits Two-Month High as Fed Eyes Rate Cut

The Indonesian rupiah strengthened to around 16,370 per dollar on Tuesday, rebounding from 16,415 in the prior session. The recovery followed the government’s announcement of a new IDR 16.2 trillion stimulus package to be implemented in Q4 2025, with some measures extended into 2026. Finance Minister Purbaya Yudhi Sadewa said the plan would not alter the 2025 budget deficit forecast of 2.78% of GDP. Last week, authorities also injected IDR 200 trillion into five state-owned banks to boost liquidity, spur lending, and support growth. On monetary policy, Bank Indonesia is expected to keep rates unchanged at 5% on Wednesday after back-to-back cuts in July and August. Earlier this month, the rupiah touched a one-month low following the sudden resignation of long-serving finance minister Sri Mulyani Indrawati, widely respected for her prudent fiscal stance, amid nationwide protests. Meanwhile, the dollar index held around 97.3, near a two-month low, as markets awaited a Fed rate cut.

Rupiah Firms on Fiscal Stimulus, Bank Injection

The South Korean Won touched 1380.00 against the USD, the highest since August 2025. Over the past 4 weeks, US Dollar South Korean Won lost 0.65%, and in the last 12 months, it increased 4.55%.

South Korean Won Hits 4-week High

The Australian dollar held steady around $0.666 on Tuesday, following gains from the previous session, supported by diminishing expectations of further interest rate cuts by the Reserve Bank of Australia. Markets are now pricing in an 86% probability that the central bank will keep rates unchanged at its September meeting. This sentiment has been bolstered by a strong July trade surplus, resilient Q2 GDP figures, and hotter July inflation. Additionally, consumer inflation expectations rose in September, signaling sustained domestic demand and raising concerns about a possible resurgence in inflationary pressures. Meanwhile, the Aussie dollar also found support from encouraging geopolitical developments. On Monday, the US and China reached a commercial agreement that would bring TikTok under US ownership, with final approval anticipated during a Friday call between President Donald Trump and President Xi Jinping.

Australian Dollar Steady

The offshore yuan hovered around 7.12 per dollar on Tuesday, trading in a tight range as investors digested fresh developments in Sino-US trade negotiations. President Trump said talks in Spain are “progressing well,” with a framework deal on TikTok’s divestment confirmed ahead of his planned discussion with Xi Jinping on Friday. However, China criticized a US proposal for steep tariffs on Chinese goods linked to Russian oil, calling it “unilateral bullying” but reaffirming its preference for dialogue. Meanwhile, Tencent Holdings is launching its first offshore yuan bond sale since 2021, with 5-, 10-, and 30-year notes aimed at boosting CNH liquidity and drawing more international investors, adding support for the yuan. Elsewhere, markets stayed cautious ahead of the much-anticipated Federal Reserve meeting, where a widely expected September US rate cut could lend further lift to the yuan.

Offshore Yuan Treads Narrow Range

The New Zealand dollar fell to around $0.596 on Tuesday, paring some of the previous session’s gains, as investors awaited GDP data expected to underscore the need for further stimulus. The New Zealand economy is projected to slip back into contraction after two consecutive quarters of growth, suggesting that recent momentum may have been short-lived and could prompt additional policy easing by the Reserve Bank. Meanwhile, losses were capped by a weaker US dollar, as markets positioned for a widely anticipated 25 bps rate cut by the Federal Reserve, though some investors still saw a small chance of a larger half-point move. Sentiment was further supported by signs of progress in US-China trade talks in Spain, easing concerns about spillover risks to New Zealand’s export-heavy economy given its close trade ties with China. On the data front, annual food inflation held steady at 5% in August, unchanged from July and remaining at its highest since November 2023.

New Zealand Dollar Declines

The yen strengthened toward 147 per dollar on Tuesday, extending gains for a second session as the dollar eased ahead of an expected Federal Reserve rate cut. Markets are almost fully pricing in a 25 basis point reduction this week, with a total of 67 bps of easing projected for the year. Those expectations have been underpinned by data showing a cooling US labor market and subdued inflation. Domestically, the Bank of Japan will set policy this week and is widely expected to keep rates unchanged at 0.5% as officials assess the impact of US tariffs on Japan’s export-driven economy. Traders are also awaiting fresh data, with exports and imports expected to remain weak and core CPI forecast to slow to 2.7%, the lowest since November 2024.

Japanese Yen Gains as Dollar Weakens

DXY decreased to 97.25, the lowest since July 2025. Over the past 4 weeks, Dollar Index lost 0.93%, and in the last 12 months, it decreased 3.62%.

Dollar Index Hits 7-week Low

The South Korean won rose to around 1,383 per dollar on Tuesday, marking its second consecutive session of gains as the dollar weakened ahead of the Federal Reserve’s September 16–17 policy meeting, where markets widely expect a 25-basis-point rate cut. Further bolstering investor sentiment, hopes for easing US–China tensions were lifted after Treasury Secretary Scott Bessent said negotiators had reached a framework for TikTok’s US operations during talks in Madrid, with confirmation expected in a call between Presidents Trump and Xi on Friday. While market participants caution that unresolved issues such as tariffs, data algorithms, and IP rights temper optimism, the prospect of reduced trade frictions boosted risk appetite in Asian markets.

Won Strengthens on Fed Cut Bets, US–China Talks

The dollar index steadied around 97.3 on Tuesday, but traded near an over two-month low as the Federal Reserve begins its two-day policy meeting later today. Markets are almost fully priced for a 25 basis point cut this week, with a total of 67 bps of easing expected by year-end. Expectations have been reinforced by recent data pointing to a cooling labor market and subdued inflation despite tariffs. President Donald Trump also urged Fed Chair Jerome Powell to deliver a larger cut, citing weakness in housing. On the data front, investors will watch retail sales, import prices, housing indicators and business inventories later today. On trade, Trump said Monday that US-China negotiations in Spain were progressing well, with Trump and Chinese President Xi Jinping set to speak on Friday to finalize terms.

Dollar Steadies Ahead of Fed Meeting

The Mexican peso strengthened past 18.4 per US dollar, the strongest level since July 2024 as the US dollar weakened and Mexico’s macro fundamentals held up, increasing the appeal of peso-denominated assets. The dollar hit its weakest level since late July as markets awaited the Federal Reserve’s policy decision and priced in a 25 basis point cut with a small chance of a 50 basis point move after data showed a cooling labour market. At the same time Banco de México has kept policy tight and signalled careful calibration even as inflation moderates. Higher real interest differentials relative to peers, sustained demand for carry in forward markets, and Mexico’s close trade links with the United States have all supported demand for local paper, limiting capital outflows.

Mexican Peso Strengthened to Over 1-Year High

The British pound climbed past $1.360, close to a 10-week high, as markets await a busy week of central bank decisions and UK data. The Bank of England is expected to hold its policy rate at 4% on Thursday and slow the pace of its £100 billion annual bond unwind. UK inflation for August, due Wednesday, is seen at 3.8% year-on-year, matching July’s 18-month high. The jobs report and retail sales will follow later in the week. Markets currently see a one-in-three chance of a BoE cut by December. Meanwhile, the Federal Reserve is expected to cut rates by 25 bps on Wednesday, with traders pricing in at least two further reductions by end-2025.

Sterling Rises Toward 10-Week High Ahead BoE Meeting

The Turkish lira steadied around record lows of 41.2 per USD in mid-September after a court postponed until October 24 a ruling on the leadership of the main opposition Republican People’s Party. The case, centered on alleged irregularities in the party’s 2023 congress and the removal of its elected leadership, had initially been scheduled for September 15. The delay provided some momentary relief to investors concerned about political instability, with banking stocks—among the hardest hit—leading the recovery. Separately, hundreds of CHP members, including Istanbul Mayor Ekrem Imamoglu, President Erdogan’s chief political rival, remain in detention pending trial in a wide-ranging investigation into alleged corruption and terrorism links. On the monetary front, the Central Bank of Turkey cut its benchmark one-week repo rate by 250 bps in September to 40.5%, slightly below expectations of 41%. Annual inflation eased to 32.95% in August while GDP expanded 4.8% yoy in Q2 2025.

Turkish Lira Steadies

The dollar index slipped to 97.3 on Monday, its weakest level since late July, as traders awaited the Federal Reserve’s policy decision. Markets have fully priced in a 25 bps cut to the fed funds rate on Wednesday, while leaving a small chance of a larger 50 bps move, after recent data pointed to a sharp cooling in the labor market. Investors will also focus on the Fed’s updated macroeconomic projections—particularly the interest rate path—with expectations that easing will continue through year-end. The vote split will be closely watched, as the FOMC has not been divided three ways since 2019. In addition, traders are monitoring whether Stephen Miran will be confirmed as a Fed governor in time for the meeting. Beyond the US, the Bank of Canada is also expected to deliver rate cuts this week, while the Bank of Japan and the Bank of England are likely to keep policy unchanged. The greenback traded mostly lower against the pound, the euro, and the yen.

Dollar Hits July Lows as Fed Meeting Looms

The South African rand firmed slightly toward 17.3 per USD, hovering near November 2024 highs, supported by strong precious metals prices—particularly gold—and a weakening US dollar. Investor focus centered on the forthcoming domestic inflation data and upcoming policy decisions from the US Federal Reserve and South African Reserve Bank later in the week. Meanwhile, South Africa's inflation expectations continued its downward trend into Q3, after the central bank said it would aim for a lower inflation level. The central bank is widely anticipated to keep the main lending rate unchanged at 7% on September 18, to control price pressures and guide expectations down to the new goal of anchoring inflation at 3%. Inflation has ticked up to 3.5% from 2.7% in March, and economists expect it to settle around 4% by year-end. Some analysts think the bank's stated preference for 3% inflation will also encourage it to maintain its repo rate after cuts in May and July.

South African Rand Hovers at 10-Month Highs

GBPUSD increased to 1.36, the highest since August 2025. Over the past 4 weeks, British Pound US Dollar gained 0.61%, and in the last 12 months, it increased 2.88%.

British Pound Hits 4-week High

The euro was little-changed at $1.17 after Fitch downgraded France’s credit rating to A+ from AA-, its lowest on record. The agency cited political instability and rising debt as newly appointed Prime Minister Sébastien Lecornu begins budget talks. Attention now shifts to a packed week of central bank meetings. The Federal Reserve is expected to cut rates by at least 25 basis points on Wednesday amid concerns over its independence, as officials weigh a cooling labor market against inflationary pressures from tariffs. The Bank of England and the Bank of Japan are widely expected to keep policy unchanged. Meanwhile, the European Central Bank last week signaled that its rate-cutting cycle may be over. President Christine Lagarde said growth risks are now more balanced, suggesting policymakers are shifting toward a steadier stance after months of easing.

Euro Hovers at $1.17 After France’s Credit Downgrade

The yen strengthened to around 147.5 per dollar on Monday, recovering part of last week’s losses as markets turned their focus to the Bank of Japan’s policy meeting. The BOJ is widely expected to leave rates steady at 0.5% as officials weigh domestic headwinds and global risks, including the effects of US tariffs. Traders also await fresh trade data, with both exports and imports projected to stay subdued, as well as inflation figures, where core CPI is forecast to slow to 2.7%, the lowest since November 2024. Externally, the Federal Reserve is anticipated to deliver a 25 basis point rate cut this week, with recent US data signaling softer labor conditions and muted inflation. Meanwhile, trading volumes are likely to remain light as Japanese investors observe a national holiday.

Japanese Yen Firms Ahead of BOJ Meeting

The Australian dollar rose to around $0.66 on Monday, extending gains from the previous week amid a softer greenback ahead of the highly anticipated FOMC policy decision later this week. Markets are currently pricing in a 96% probability of a 25 bps rate cut on Wednesday, with only a slim 4% chance of a larger 50 bps move. On the domestic front, Australia’s economic calendar remains relatively light this week. However, investor focus is shifting toward the upcoming employment report and scheduled speeches from RBA officials, which could offer further insight into the central bank’s policy trajectory. Last week, RBA Governor Michele Bullock highlighted encouraging signs of “a little bit more growth” in the private sector, characterizing this as a positive signal for the broader economy. Her remarks reinforced the RBA’s cautious stance and supported market expectations that the central bank will keep rates on hold at its upcoming policy meeting at the end of the month.

Australian Dollar Rises Amid Softer Greenback

The offshore yuan steadied to around 7.12 per dollar on Monday, halting the previous session's losses, as investors monitored US-China talks and digested weaker-than-expected domestic economic data. US and Chinese officials began discussions in Madrid on Sunday aimed at easing tensions over national security and trade, including a looming deadline for Chinese short video app TikTok to divest and Washington’s push for allies to impose tariffs on Beijing over Russian oil. The talks marked the fourth such meeting in four months across European capitals. Meanwhile, fresh Chinese data underscored a fragile outlook, with retail sales up just 3.4% in August, the slowest in eight months, and industrial output growth easing to 5.2%, its weakest in a year. Fixed-asset investment rose only 0.5% in January–August, well below forecasts, while the jobless rate climbed to a six-month high of 5.3%. Markets now turn to this week’s loan prime rate decision, with expectations pointing to no change.

Offshore Yuan Holds Steady

The South Korean won appreciated to around 1,389 per dollar on Monday, recouping losses from last week as investor concerns over policy risks eased. Monday’s confirmation that the threshold for major shareholders will remain at KRW 5 billion provided greater policy clarity, further easing concerns over potential equity market disruptions and associated capital outflows. Additional support for the won came from ongoing trade discussions between Seoul and Washington. According to government officials, South Korea has proposed establishing an “unlimited” bilateral currency swap arrangement with the US as part of its follow-up negotiations on a tariff framework deal agreed in late July. The proposal is aimed at strengthening financial stability and providing a safeguard against volatility in the won-dollar exchange rate, particularly as Seoul faces the prospect of sizable capital outflows linked to its pledged investment package in the US.

Won Strengthens on Policy Clarity, Swap Talks in Focus

The New Zealand dollar rose to around $0.596 on Monday, recouping losses from the last session and moving back toward a four-week high, supported by a softer US dollar ahead of the widely expected FOMC rate cut later this week. Markets are pricing in a 96% chance of a 25bps reduction on Wednesday and just a 4% probability of a larger half-point move, following recent US data that pointed to a softer labor market and easing inflation pressures. At home, the latest PMI survey showed the services sector weakening further in August, remaining well below its long-term average and extending its contraction streak to 18 months. The downbeat results underscored the sluggish state of the economy and strengthened expectations for additional policy easing by the Reserve Bank, with Governor Christian Hawkesby recently reaffirming guidance for another 50bps cut by year-end, conditional on incoming data. Investors are now focused on Q2 GDP figures, along with the August trade balance.

New Zealand Dollar Rises

The Hong Kong Dollar touched 7.78 against the USD, the highest since May 2025. Over the past 4 weeks, US Dollar Hong Kong Dollar lost 0.57%, and in the last 12 months, it decreased 0.21%.

Hong Kong Dollar Hits 18-week High

The dollar index hovered around 97.6 on Monday, holding close to ten-week lows as investors awaited the Federal Reserve’s closely watched policy meeting this week. Markets are pricing in about a 96% chance of a 25 basis point rate cut on Wednesday and roughly a 4% probability of a larger half-point move. Those bets follow recent US data showing a cooling labor market and subdued inflation. Traders are also monitoring whether Stephen Miran will be sworn in as a Fed governor in time for the meeting, while fresh signals on economic momentum will come from the Empire State Manufacturing Index due later today. Elsewhere, central banks in Canada and China are expected to cut rates this week, while policymakers in Japan and the UK are likely to keep settings unchanged.

Dollar Steady Ahead of Fed Meeting

The Brazilian real strengthened past 5.4 per US dollar in September, the strongest since June 2024, as clearer prospects of Fed easing drove dollar weakness while still-generous domestic interest rates and improving inflation dynamics attracted foreign capital. Externally, a run of softer US labour and price data, including large downward payroll revisions and weaker wholesale/producer inflation, pushed US yields and the dollar lower, removing the main external headwind. Domestically, August’s 5.13% inflation surprised to the downside, signaling decelerating headline inflation and trimming the inflation risk premium. That disinflationary impulse, together with a still-high Selic at 15%, keeps Brazil’s interest-rate differentials attractive. Elsewhere, political headline risk from the Bolsonaro trial remains a potential source of volatility but has so far been outweighed by the global funding pivot and the improving domestic inflation picture.

Brazilian Real Rises to Over 1-Year High

The South African rand traded around 17.35 per USD, near its highest since early November 2024, largely supported by a rally in precious metals, with gold prices hitting new highs. Meanwhile, investor attention shifted toward the upcoming release of domestic consumer price inflation data and next week’s monetary policy decision. South Africa continues to grapple with persistent inflation and a fragile growth outlook, now further pressured by newly imposed US tariffs. The economy expanded by 0.8% quarter-on-quarter in Q2, following a marginal 0.1% increase in Q1, lifting annual growth to 0.6%. However, overall momentum remains sluggish. The recent introduction of a 30% U.S. tariff on South African goods—the highest rate in sub-Saharan Africa—is expected to weigh on economic performance starting in the third quarter.

South African Rand Hovers Around 10-Month High

The Russian ruble surged past 82 per USD on Friday from the five-month low of 85 touched earlier in the session amid a hawkish pivot by the Bank of Russia. The central bank cut its benchmark rate by 100bps to 17%, contrasting from expectations of a 200bps cut despite the downward revision to growth forecasts by the CBR earlier this year. Monetary policymakers stressed that inflation expectations remained elevated and that labor markets remained tight, warranting caution on the cutting cycle. The ruble had been supported this year by capital controls by the Kremlin, which has companies selling 40% of export proceeds, although the Kremlin has stated that firms are selling 70% of their earnings. Still, the currency holds weaker than this year's peak of 76 on growth concerns and softer exports. Oil and fuel export revenues sank in August, according to the IEA, amid softer demand from China and headwinds from India as they face tariffs from the US.

Russian Ruble Surges after Softer Rate Cut

The British pound held near $1.35, little changed from last week’s levels, after fresh data signaled a weak start to the third quarter. GDP stagnated in July as expected, but industrial production unexpectedly fell 0.9%, suggesting that tax hikes and tariffs are weighing on households and businesses. The release comes as Chancellor of the Exchequer Rachel Reeves prepares to announce further tax increases in November to plug a new multibillion-pound budget gap. The Bank of England is set to decide on monetary policy next week, with no changes in interest rates anticipated after its August cut. Attention is shifting to the central bank’s November 6 meeting, which falls just ahead of the budget, with many market participants still expecting another rate reduction.

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