Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.
USD
US inflation came in softer than expected, with core CPI up just 0.2 percent and the annual rate steady at 3.0 percent. CBA and Westpac both say this clears the way for the Federal Reserve to cut rates by 25 basis points at this week’s meeting. Stocks rallied to record highs, while Treasury yields held around 4 percent. Danske notes that the Fed is likely to keep its easing bias but remind markets that policy will remain “data-dependent.”
Marc to Market calls this a “consequential week” for the dollar, with the Fed, ECB, BoJ, and BoC all meeting. While rate cuts normally weaken a currency, the USD has stayed firm because global growth remains patchy and the US still offers the highest yields among major economies. Lloyds also cautions that ongoing political uncertainty and trade tensions could support safe-haven demand.
For traders, the dollar is steady rather than strong. The near-term direction hinges on the Fed’s message—another cut in December could soften USD, but any sign of caution may keep it bid.
EURUSD
The euro was stable last week, supported by better PMI data and expectations that the ECB will leave rates unchanged on Thursday. Danske and Lloyds both highlight that Eurozone growth remains weak but inflation is finally close to target. ECB officials, including Vice-President Escrivá, signaled patience rather than new easing, noting that inflation progress allows time to assess the outlook.
Marc to Market expects the ECB to hold policy steady and emphasize that the disinflation trend is intact. With markets already pricing some cuts for early 2026, there is little reason for the ECB to move soon.
Overall, EURUSD remains range-bound near 1.16. The risk balance slightly favors the euro if US yields fall after the Fed cut, but upside will be capped unless European growth improves.
GBPUSD
The British pound stayed quiet, even after stronger retail sales and PMI figures. Lloyds points out that markets are still pricing one more small rate cut from the Bank of England later this year as growth remains fragile. Danske expects the BoE to keep a cautious tone given slowing inflation and softer wage growth.
For now, GBPUSD is drifting in a narrow band around 1.33. A break higher would need stronger data or a more hawkish BoE message, while weak growth numbers would quickly revive selling pressure. Traders remain more comfortable buying USD dips than chasing sterling strength.
USDJPY
The yen continues to underperform, hovering near 153. Westpac notes that markets are watching Japan’s new Prime Minister, Sanae Takaichi, who has promised new fiscal measures to support households. Danske expects the BoJ to keep rates unchanged this week, describing the decision as a “hawkish hold,” with inflation still near 3 percent but momentum fading.
Scotiabank’s global outlook adds that the BoJ is likely to repeat that wage growth remains essential before tightening further. With yields steady in the US and little movement expected from Tokyo, USDJPY looks set to stay in its 150–153 range unless the Fed surprises markets mid-week.
AUDUSD
The Australian dollar outperformed after weekend reports of a breakthrough in US-China trade talks. InvestingLive said China agreed to delay export controls on rare earth materials in exchange for Washington backing off planned tariffs. CBA and Westpac both confirm that this news, combined with softer US inflation, lifted risk appetite and supported AUD buying.
Locally, Wednesday’s Q3 CPI release is key. Westpac expects headline inflation to rise 1.1 percent for the quarter, keeping annual inflation around 3 percent. That should be enough for the RBA to stay on hold in November but not high enough to trigger concern. If CPI surprises on the upside, the Aussie could extend gains toward 0.67.
The overall tone is constructive. As long as global risk sentiment holds and Chinese demand stabilizes, AUDUSD is likely to stay firm.
NZDUSD
The New Zealand dollar also climbed on optimism about US-China trade progress. Westpac’s New Zealand team notes that inflation has picked up to 3 percent but most of the increase came from food and council rate costs rather than broad price pressure. Core inflation is now just over 2 percent, and with growth soft, the RBNZ is expected to cut rates again in November.
Danske and Marc to Market both say this easing bias keeps NZD supported in the short term but limits upside beyond 0.58–0.59. A stronger Australian CPI could also help AUDNZD rebound from current lows.
Overall, NZD’s tone is positive but cautious. Traders will stay focused on the RBNZ and any signs of improvement in China’s economy.
USDCAD
The Canadian dollar slipped slightly after President Trump announced that trade talks with Canada had been “terminated,” though markets see that as temporary. Scotiabank and Marc to Market both expect the Bank of Canada to cut its policy rate by 25 basis points this week, taking it to 2.25 percent. They note that growth has been flat and inflation pressures are easing.
Oil prices were steady near 62 dollars a barrel, providing some support. Lloyds adds that seasonal patterns often weigh on CAD late in the year, suggesting USDCAD may stay between 1.39 and 1.41 for now.
Unless the BoC hints at a pause in easing, the Canadian dollar is likely to remain soft into November.
Other Pairs
Barclays points out that risk sentiment is fragile after recent gains in global markets. If trade optimism fades or geopolitical tensions rise, safe-haven currencies like the Swiss franc and yen could strengthen again. Emerging-market currencies may remain volatile as investors balance rate-cut hopes against ongoing uncertainty around US trade policy.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Neutral | Fed cut expected, softer CPI, risk sentiment steady |
| EURUSD | Range | ECB on hold, improving PMIs, moderate growth |
| GBPUSD | Mildly bearish | Slow UK growth, BoE easing risk |
| USDJPY | Bullish bias | Yield gap with US, BoJ cautious |
| AUDUSD | Mildly bullish | US-China trade progress, solid CPI outlook |
| NZDUSD | Mildly bullish | RBNZ easing, improving risk tone |
| USDCAD | Range to slightly bullish USD | BoC cut, trade tensions, steady oil prices |
Key Event Outlook
United States
The Fed meets Wednesday and is widely expected to cut rates by 25 basis points. Markets will focus on Powell’s tone. A clear signal of another cut in December could weaken the dollar, while a cautious message could keep it firm. The shutdown has delayed some US data, adding uncertainty.
Eurozone
The ECB meeting on Thursday should confirm that policy will remain on hold. Inflation is now near target, but growth is uneven. Officials are likely to stress patience rather than new easing. Traders expect little change unless the ECB’s guidance turns unexpectedly dovish.
United Kingdom
The BoE meets next week. This week’s focus is on forward-looking data—especially retail and confidence surveys—to see whether recent stability can last. Markets still expect one small rate cut before year-end.
Japan
The BoJ will meet Friday and is expected to hold its policy rate at 0.5 percent. Officials are likely to highlight weaker wage momentum and falling inflation pressure. USDJPY should stay near current highs unless US yields drop sharply.
Australia
Australia’s Q3 CPI on Wednesday is the main event. Westpac forecasts 1.1 percent quarterly inflation, keeping annual CPI at 3 percent. This would support the RBA’s cautious stance ahead of its November meeting. A stronger print could lift AUD further.
New Zealand
The RBNZ doesn’t meet this week, but Acting Governor Hawkesby is scheduled to speak. Markets expect another 25 bp cut in November, and traders will watch his comments for confirmation.
Canada
The Bank of Canada meets Wednesday and is expected to cut rates by 25 basis points. Weak growth and easing inflation support this move. CAD traders will also track any follow-up on US trade tensions.
Geopolitics
Markets welcomed signs of a US-China trade compromise. Presidents Trump and Xi are expected to meet later this week. Progress could support AUD and NZD further; any setback may reverse recent gains.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
Sources
- Westpac Weekly Report – 27 October 2025
- Westpac Morning Report – 27 October 2025
- Commonwealth Bank Economics Daily Alert – 27 October 2025
- Danske Bank Weekly Focus – 24 October 2025
- Lloyds Bank Market Insights Weekly – 24 October 2025
- Marc to Market – Week Ahead: A Most Consequential Week (24 October 2025)
- Scotiabank – The Global Week Ahead: The Fed Faces Record US Policy Uncertainty (25 October 2025)
- Barclays Weekly Insights – 24 October 2025
- BNZ Markets Outlook – 20 October 2025
- InvestingLive – “ECB’s Escrivá Signals Extended Policy Pause” (26 October 2025)
- InvestingLive – “AUD and NZD Jump Higher on News of US–China Trade Agreement” (26 October 2025)
