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

USD

Most banks see this week’s Fed meeting as the key driver. Danske Bank expects a 25 bp cut to 3.50–3.75% with Powell delivering a “hawkish cut” that pushes back on the idea of ongoing, back-to-back cuts in early 2026, and projects a pause after December with only two more cuts by mid-2026.

Marc to Market notes the dollar has already sold off into the meeting and that rate spreads versus Germany, Japan and China have narrowed sharply, which has weighed on the dollar in recent weeks. BNZ and Scotiabank also look for a 25 bp cut, but warn the dot plot and Powell’s tone could be less dovish than markets hope, limiting downside for US yields.

Lloyds and Commerzbank highlight that markets are already discounting a third consecutive cut and will focus on the 2026 path and who becomes the next Fed chair. For traders, that means short-term dollar weakness can flip into a squeeze higher if the Fed signals a slower cutting path or a higher long-run rate.

EURUSD

On the euro side, Lloyds points out that euro area growth is still soft but stabilising, while core inflation remains above target, giving the ECB little reason to cut soon. Commerzbank notes stubborn core inflation at 2.4% and expects the ECB to stay on hold. Danske Bank thinks a hawkish Fed cut could push EURUSD lower on the day, but keeps a 12-month target up at 1.22 as US–euro rate differentials narrow over time.

Westpac and BNZ also forecast EURUSD drifting higher through 2026 toward 1.18–1.21. In the very near term, EURUSD looks range-bound with downside risk into the Fed, then scope for a dip-and-buy environment if Powell is not as dovish as priced.

GBPUSD

Lloyds stresses that UK data are still soft, with October GDP expected to be flat and the BoE facing pressure to start cutting as early as the 18 December meeting, where markets price a high chance of a first move.

Political noise around the recent Budget has eased for now, but the hearings for MPC members and Chancellor Reeves this week will be watched for any shift in policy tone.

Westpac’s forecasts have GBPUSD grinding higher over the year toward 1.35–1.38 as UK inflation trends down and the Fed also cuts. Near term, most banks see GBP weighed by weak growth and an impending BoE cut, but supported by a softer dollar, leaving GBPUSD biased to trade in a choppy range rather than trend.

USDJPY

Japan is where the macro story is shifting fastest. Commerzbank’s “Japanese interest rate dawn” piece says BoJ officials are signalling a hike to 0.75% at the December meeting, with another move to 1% next June if inflation stays above target.

They argue persistent above-target inflation and the risk to BoJ credibility justify tightening, and note that markets are now pricing stronger Japanese hikes, which is finally helping the yen after weeks of weakness.

Marc to Market notes the odds of a December BoJ hike have jumped to about 90%, and that USDJPY is now more sensitive to US 2-year yields than to US 10-year yields. Westpac’s forecasts have USDJPY gradually falling from around 155 toward 140 over the next two years.

The consensus is shifting toward a stronger yen over the medium term, so rallies in USDJPY look increasingly like selling opportunities, especially if the Fed signals a slower easing path while the BoJ tightens.

AUDUSD

Westpac notes the Aussie has outperformed as Australia’s economy shows stronger momentum than the US, with solid jobs growth, firm domestic demand and high commodity prices.

They expect the RBA to hold this week but to deliver “hawkish messaging” that keeps the door open to hikes in early 2026, which should support AUD. BNZ highlights the same story: Q3 domestic demand rose 1.2 percent quarter on quarter and October household spending jumped 1.3 percent month on month, pointing to robust consumption and raising the odds that the RBA will need to tighten further.

However, Marc to Market expects the RBA to hold and sees markets treating this week as confirmation that the RBA, SNB and BoC are likely done with hikes, which would temper AUD gains. Westpac’s FX forecasts still have AUDUSD rising toward 0.70–0.71 over 2026 as rate spreads and commodities work in its favour. Overall, banks lean mildly positive on AUDUSD, with dips seen as buyable while China data and RBA communication remain supportive.

NZDUSD

BNZ reports that NZDUSD has pushed up to around 0.5775, supported by a weaker USD and the RBNZ’s recent “hawkish cut” in November. They see near term resistance at 0.58 and the 200-day moving average near 0.5860, but still target 0.59 by year end.

BNZ also notes that December is often seasonally weak for the USD and that speculation about a more dovish Fed chair next year has reinforced expectations of further Fed easing through 2026. Westpac’s forecasts similarly have NZDUSD grinding higher toward 0.60–0.65 over the next two years. Still, BNZ stresses that NZD upside will depend on whether the RBA turns more hawkish and widens the NZ–AU rate gap, which would put pressure on NZD crosses even if NZDUSD edges higher.

For traders, NZDUSD is seen as in a constructive range, with buy-on-dips interest but strong resistance just above 0.58 in the short run.

USDCAD

Scotiabank’s Global Week Ahead focuses on the Bank of Canada meeting, arguing that Taylor-rule estimates actually point to policy being a bit too easy, but base case is still for a hold, with markets pricing the next move as more likely up than down. Marc to Market says the BoC is set to hold this week and that markets think the BoC, like the RBA and SNB, is done with the cycle for now.

BNZ also expects the BoC to stay on hold for an extended period after its earlier easing, leaving CAD driven by US data and oil. The combination of a cutting Fed and a steady BoC points to a modestly lower USDCAD over time, although near-term moves will hinge on the Fed message and global risk sentiment.

Other Pairs (if discussed)

Marc to Market notes that the franc was the only G10 currency not to gain against the dollar last week, as it has increasingly been used as a funding currency. Swiss authorities seem comfortable with a weaker franc versus both USD and EUR, and Scotiabank expects the SNB to keep policy on hold.

BNZ and Scotiabank highlight that the Chinese yuan has strengthened to its firmest levels of the year, with the PBoC leaning against further appreciation through the daily fix, while NZD and CNY have recently decoupled. EM stories are more idiosyncratic: Mexico enjoys moderate inflation and steady policy, Turkey’s central bank is expected to cut again despite stubborn core inflation, and Brazil’s central bank is stuck on hold with inflation still too high.

Bias Table

Key Event Outlook

United States

The main event is the FOMC meeting, where the Fed is widely expected to deliver a 25 bp cut to the 3.50–3.75 percent range. Scotiabank and Danske both flag this as a likely “hawkish cut” with a dot plot that shows only limited further easing in 2026, so the statement and Powell’s press conference will be crucial for USD and rate expectations. Ahead of the meeting, markets get JOLTS job openings and the Q3 Employment Cost Index, which will be used to gauge labour demand and wage pressure into 2026. Trade data and weekly jobless claims round out the US calendar, but the Fed message will dominate FX moves.

Eurozone

Eurozone data are relatively light. Commerzbank notes German and French CPI revisions plus industrial production and trade as the main releases, but stresses that core inflation is still above target and likely to keep the ECB on hold for some time. Scotiabank also points to German industrial production and exports as key checks on whether the region’s manufacturing slump is stabilising. For EUR, surprises around growth or inflation could nudge expectations for the first ECB cut in 2026, but the big driver this week is still the Fed.

United Kingdom

Lloyds highlights a busy week in Westminster, with Chancellor Reeves testifying to the Treasury Select Committee and several MPC members appearing in Parliament to discuss the Monetary Policy Report and the Budget’s impact on the outlook. Friday’s October GDP print is expected to show flat growth, underscoring the slow UK recovery and adding pressure on the BoE ahead of its 18 December meeting, where markets see a strong chance of the first rate cut. For GBP traders, weak GDP or dovish BoE messaging would argue for fading rallies in GBPUSD and watching EURGBP topside.

Japan

The key Japanese releases this week are the final Q3 GDP print and current account data, which will confirm that the economy contracted at an annualised rate of about minus 1.8 percent in Q3 despite extremely low interest rates and an undervalued currency. Commerzbank stresses that inflation remains above target and that BoJ officials are signalling a hike to 0.75 percent at the December 19 meeting, with another hike in June 2026. This keeps event risk high for USDJPY and JPY crosses: stronger inflation or firm wage signals would reinforce expectations of a historic shift away from negative real rates.

Australia

RBA policy is front and centre. BNZ, Westpac and Scotiabank all expect the RBA to hold at 3.60 percent, but differ on tone: Westpac and BNZ see room for a more hawkish bias given strong domestic demand and firm labour data, while Scotiabank thinks the bank will keep a patient stance even as markets flirt with the idea of another hike. Later in the week, November employment data and the NAB business survey will update the growth picture and can quickly shift pricing for early 2026 RBA moves, which matters directly for AUDUSD and AUD crosses.

New Zealand

BNZ’s calendar flags domestic manufacturing data and the usual survey indicators, but the main NZD drivers are offshore: the Fed, RBA and BoC meetings, plus Chinese trade and CPI data. BNZ still sees NZDUSD in a trading range with resistance around 0.58, and stresses that any shift to a more hawkish RBA while the RBNZ stays on hold would keep pressure on NZD/AUD even if NZDUSD edges higher.

Canada

Scotiabank’s BoC preview is a key input. They expect the BoC to hold, but their Taylor-rule analysis suggests policy is already too easy and that the next move is more likely to be a hike than another cut. The decision and Governor Macklem’s press conference will be watched for any shift toward a tightening bias. Canadian trade, wholesale and building permits data will also colour the domestic growth picture, but the main FX implication is whether US–Canada rate spreads continue to compress, favouring CAD.

Other / Geopolitics

Scotiabank’s global dashboard also highlights central bank decisions in Switzerland, Brazil, Turkey, Peru and the Philippines. SNB is expected to stay on hold, accepting a weaker franc even as inflation sits near the lower end of its target. Turkey is likely to cut again despite sticky inflation and a fragile lira, while Brazil is stuck with a very high Selic rate as services inflation remains hot. China releases trade and CPI data, where markets look for very low inflation and soft exports, and any surprise stimulus hints could move AUD, NZD and Asian FX.