Weekly FX Report Summary

Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.

USD

Scotiabank notes that the long US government shutdown and lack of data have created extra uncertainty and a visible split inside the Fed. That uncertainty, plus typical Q4 seasonals, keeps the dollar supported in the near term.

Marc to Market points out that the shutdown has now ended and markets have cut the odds of a December Fed cut to just above 40 percent, down from about two thirds a week earlier.

Looking ahead, Scotiabank, Danske Bank, and Commerzbank all expect the Fed to ease further through 2026, with futures pricing around 80 basis points of cuts by the end of 2026. Danske sees both US and euro area growth slowing into late 2025 before picking up again in 2026. Scotiabank still has a medium term bearish USD view, arguing that slowing growth, softer ISM style surveys, and high equity valuations should eventually push the dollar lower as the Fed cuts more than other major central banks.

For traders, the message is that the dollar can stay firm while data uncertainty is high and yields are elevated, but the medium term bias from most banks is for a weaker USD once the data flow resumes and confirms slower US growth.

EURUSD

Scotiabank says the euro has stabilised after mid year political stress and now looks set to resume gains in 2026 on the back of steady growth and a European Central Bank that is finished cutting. Their forecasts have EURUSD near 1.16 by end 2025 and rising further over 2026. Westpac also projects a higher EURUSD over its forecast horizon.

Commerzbank notes that the dollar index slipped last week while EURUSD gained more than 50 pips, highlighting that dips are still being bought. Danske flags this week’s euro area current account, final HICP inflation, and especially the flash PMIs as key tests for the improving growth story. Overall, banks lean bullish EURUSD into 2026 but warn near term price action will swing with US data and euro PMIs.

GBPUSD

Scotiabank sees sterling as cheap on long run measures and expects it to climb as UK policy rates stay modestly above the Fed funds rate, even with some extra BoE easing in 2026 already priced. Their forecasts show GBPUSD moving into the low to mid 1.30s over the next couple of years. Westpac is broadly in the same camp, with a higher cable profile over time.

Near term, though, Marc to Market notes that a string of weak UK data has markets confident the BoE will cut rates at its 18 December meeting. Westpac highlights that UK gilts sold off and GBP dropped after reports that the Chancellor will scrap planned tax hikes, which adds fiscal uncertainty. Danske points to this week’s UK CPI and retail sales as key for confirming the inflation downtrend. For traders, that means a medium term bullish story but choppy, data driven trading conditions in the short run.

USDJPY

Scotiabank stresses that Japan is the only major central bank they see tightening over the coming year. They expect the BoJ to start lifting rates, supported by US officials encouraging Japan to normalise policy. Their forecast path has USDJPY falling from around 150 at end 2025 toward 130 by end 2027. Westpac has a similar profile, looking for lower USDJPY as yield spreads narrow.

Marc to Market notes that markets have cut the probability of a December BoJ hike for six straight sessions, now pricing roughly a one in three chance, down from near 50:50 a week ago. Commerzbank points out that USDJPY is still near 155 with US 10 year yields elevated, so intervention risk from Tokyo remains in play. The big picture from the banks is for a turn lower in USDJPY over the next year or two, but with plenty of short term volatility around US data and BoJ headlines.

AUDUSD

Scotiabank argues that the RBA is now at or near the end of its tightening cycle but is likely to ease less than the Fed over the coming years. That relative stance, plus steady growth, supports a medium term grind higher in AUDUSD. Their forecasts show the pair lifting from current levels into the high 0.60s and beyond over time.

Marc to Market also notes that markets have grown more confident that the RBA’s easing cycle is over. Westpac’s morning note highlights that the Aussie held most of its early week gains and finished around 0.654, even as global risk sentiment turned cautious. Westpac New Zealand emphasises Australia’s economic outperformance and stronger data surprises on CPI and labour markets. Overall, the banks see AUDUSD range trading near term but biased higher as US yields peak and Chinese activity stabilises.

NZDUSD

Westpac New Zealand describes the domestic economy as a jalopy in the mud, with mixed growth and falling dairy prices, and expects New Zealand interest rates to drift a bit lower yet. They think this means the exchange rate should stay weak, even though the softer NZD is helping tourism and export sectors.

In FX, Westpac notes that NZDUSD has stabilised after dropping to new lows near 0.56 and now expects a consolidation between 0.56 and 0.57, with a test of the top of the range possible. Their forecast table keeps NZDUSD only slightly higher at 0.57 by end 2025, still well below its five year average around 0.63. Markets are pricing a 25 basis point RBNZ cut on 26 November and a risk of one more cut by mid 2026. The main short term driver remains the US dollar’s reaction to the backlog of data, not local news.

USDCAD

Scotiabank’s new global FX outlook highlights that CAD has been pulled lower by wider US Canada short term rate spreads, ongoing trade uncertainty, and higher volatility. They judge the October BoC cut as likely the last of the cycle, with policy already at the low end of neutral and not a cure for deeper trade shocks.

Scotiabank expects loose fiscal policy and an eventual BoC tightening phase to support growth and narrow the rate gap with the Fed from late 2026 onward, which should help CAD recover. Their forecast path has USDCAD starting around 1.40 at end 2025 but moving down toward 1.30 by end 2027. Trade policy remains the key risk, especially if US tariffs widen again. For traders, that means USDCAD is vulnerable to downside over the medium term, but near term swings will track US data and tariff headlines.

Other Pairs

Scotiabank sees the Swiss franc as rich but expects it to hold firm as a safe haven. Their forecasts have USDCHF drifting a bit lower and EURCHF nudging higher as the SNB keeps policy relatively cautious.

In EM, Scotiabank notes that easing trade concerns and attractive carry have supported Latam FX, with COP outperforming and CLP lagging due to copper volatility and election risk. They expect regional FX to be broadly steady to slightly softer over the coming year, with tail risks from security and politics. Commerzbank flags that Trump’s move to exempt hundreds of food items from tariffs is aimed at lowering grocery prices and could ease some pressure on food exporters and related EM currencies.

Bias Table

Key Event Outlook

United States

Danske and Marc to Market both stress that the main story this week is the restart of US data after the shutdown. The key release is the delayed September non farm payrolls report, where ADP has already shown a small loss in private jobs. Danske also highlights the Empire State survey, industrial production, housing starts, building permits, and the October FOMC minutes as important signals on activity and the Fed’s reaction function.

Commerzbank notes that futures currently price about a 43 percent chance of a December cut and 80 basis points of easing by the end of 2026. Strong data that push back against that view would support the dollar and keep yields high. Softer data would likely trigger USD selling, curve bull flattening, and support for high beta FX.

Eurozone

Danske focuses on euro area current account, final October HICP (headline and core), and Friday’s flash PMIs as the main releases. These will tell markets whether the recent improvement in growth momentum is holding up. Danske notes that PMIs have been signalling better growth for most of this year, but recent sentiment data such as ZEW and Sentix have softened.

For EUR, upside reactions are likely if PMIs stay firm and inflation holds near 2 percent, since that supports the story of no more ECB cuts. Negative surprises would risk a correction lower in EURUSD and support for USD and CHF.

United Kingdom

The main UK release is October CPI, followed by retail sales and PMI data. Barclays and Danske both see further progress lower in inflation, which markets are already using to justify a December BoE cut.

For GBP, a bigger than expected drop in core CPI or soft retail sales would reinforce BoE easing expectations and likely cap rallies in GBPUSD. Any upside surprise on prices or activity could trigger a short squeeze, given the heavy focus on cuts and recent gilt selloff.

Japan

Japan releases Q3 GDP, industrial production revisions, trade data, machine orders, and October CPI over the week. These indicators will feed into the debate over whether the BoJ can hike in coming meetings. Marc to Market notes that markets have already cut the odds of a December hike to about one in three.

For JPY, softer data and lower CPI would keep policy normalisation slow and support USDJPY on rallies, while stronger numbers would back the banks’ medium term view of a stronger yen and could pull the pair off recent highs.

Australia

Westpac points to Australian wage data and the next CPI print as the big tests after recent upside surprises. Strong wages and sticky inflation would reinforce the idea that the RBA is done cutting and may need to stay restrictive for longer, which supports AUD on dips.

Australian data also matter for NZD crosses, since Westpac expects ongoing Australian outperformance and sees NZD against AUD as still in a structural downtrend despite being technically oversold.

New Zealand

Westpac highlights Selected Price Indices and housing data as the main local releases this week. The big event is the 26 November RBNZ review, where markets price a 25 basis point cut and some chance of one more cut by May 2026.

For NZD, Westpac thinks the main driver in the immediate week is still the US data rebound, but any surprise in local inflation components or housing could tweak expectations for how far the RBNZ will go.

Canada

Danske notes October Canadian CPI as an important release early in the week, which will help confirm whether inflation is settling near the BoC’s 2 percent target after the recent cut. Scotiabank stresses that BoC policy is now at the low end of neutral and that further cuts are unlikely unless the growth outlook worsens.

For CAD, a soft CPI print would support the recent move higher in USDCAD and keep markets talking about downside growth risks. A firmer reading would back Scotiabank’s view that the easing cycle is done and could trigger a retracement lower in USDCAD, especially if US data also disappoints.

Other / Geopolitics

Commerzbank’s Asia team notes that President Trump has exempted hundreds of agricultural products from reciprocal tariffs, including coffee, beef, and tropical fruits. The move is aimed at easing grocery price pressure and shows a political pivot toward affordability. This is mildly positive for food exporters and related EM FX, especially in Latam and Oceania.

Barclays and Westpac both highlight ongoing weakness in Chinese activity data, even as equity markets hold up, which keeps commodity currencies and Asian FX sensitive to any sign of new Chinese policy support. Traders should stay alert to headlines on China stimulus, further tariff shifts, and UK fiscal policy, as these can trigger fast moves across risk assets and FX.