Weak US jobs have pushed the dollar lower and reduced expectations for further Fed rate hikes. US CPI, the RBA decision and UK GDP are the main tests for FX markets this week.
What Matters Most
The US dollar starts the week under pressure after payrolls fell by 23,000 in July. Earlier months were also revised lower, while wage growth slowed. This has weakened the case for another Federal Reserve rate hike.
The banks are divided on what comes next. Commerzbank expects the Fed to leave rates unchanged this year. CBA still expects the first hike in December, while Danske Bank’s latest formal view also points to more tightening. However, Danske Bank’s forecast was prepared before the weak payroll report.
US CPI is now the main test. Softer inflation would support another move lower in the dollar. A stronger result could bring rate-hike expectations back into the market and reverse part of the recent move.
USD
The US dollar starts the week under pressure after the July employment report showed payrolls falling by 23,000. May and June were also revised down by a combined 103,000, while wage growth slowed to 3.2%.
Commerzbank says the report was weak across the board. It believes slower wage growth shows that demand for workers is fading and expects the Fed to leave rates unchanged this year. Its 10 August currency briefing says there is room for the market to remove more Fed hike pricing if US inflation is also soft.
CBA takes a different view. It believes low immigration and high retirement rates mean weak job creation does not necessarily point to rising labour market slack. CBA still expects the Fed’s first hike in December.
Danske Bank also expects hikes in December and March. However, its 7 August Weekly Focus was completed before the payroll report and still describes the US economy as strong enough to support tighter policy. That view now needs to be tested against the weaker employment numbers.
Lloyds Bank says the jobs result has shifted attention from inflation towards growth. Marc to Market also believes it will be difficult to rebuild Fed hike expectations unless inflation is clearly stronger than expected.
The short-term USD bias is mildly bearish. However, disagreement between CBA, Danske Bank and Commerzbank means Wednesday’s CPI report could produce a sharp move in either direction.
EURUSD
EURUSD has recovered to around 1.1560 as weaker US employment data pushed Treasury yields and the dollar lower.
Commerzbank expects US rate expectations to move lower over the coming quarters. It forecasts EURUSD at 1.16 in September, 1.17 in December and 1.19 by the end of 2027.
Commerzbank does not expect the euro’s recovery to be completely smooth. Europe remains more exposed to high energy prices because it imports more of its energy. A lasting reopening of the Strait of Hormuz would help European growth, but lower energy prices could also reduce expectations for further ECB hikes.
Danske Bank remains more cautious. Its formal forecast points to EURUSD falling towards 1.12 over 12 months, based on Fed tightening and continued USD rate support. However, that forecast was published before the latest payroll data.
Scotiabank says the technical picture has improved, with support around 1.1500 and the 200-day moving average near 1.1630. Marc to Market also identifies the 1.1625 area as the next important test.
The near-term bias is mildly bullish. The move is being driven mainly by weaker USD expectations, while 1.1625 to 1.1630 remains the main resistance area.
GBPUSD
GBPUSD briefly moved above 1.35 after the US jobs report before giving back part of the move.
Lloyds Bank expects the UK economy to have grown by 0.5% in the second quarter. That would be stronger than the Bank of England’s 0.3% forecast and would show that activity remained more resilient than policymakers expected.
CBA expects growth of 0.4%. It cautions that seasonal issues may be making the first half of the year look stronger than the underlying UK economy.
Scotiabank describes the short-term GBPUSD trend as bullish to neutral, but notes resistance in the mid-1.35 area. Support sits in the upper 1.32s.
The pound should continue to benefit if the USD weakens. However, GBPUSD will need a solid UK GDP result to break clearly above 1.35.
USDJPY
USDJPY has fallen below 158 following weaker US employment data and recent coordinated US-Japan intervention.
CBA notes that the yen strengthened as US yields fell after payrolls. BNZ also reports that speculative yen shorts have dropped sharply, showing that traders are taking intervention risk seriously.
Scotiabank says narrowing US-Japan yield spreads favour a lower USDJPY. It sees resistance above 160 and support below 156. Westpac expects USDJPY to remain elevated in the near term before gradually declining as rate spreads narrow.
The bias remains bearish. Softer US CPI would add to the downward pressure, while a strong inflation result could quickly push the pair back towards intervention-sensitive levels.
AUDUSD
AUDUSD is trading above 0.70 ahead of Tuesday’s RBA decision.
CBA expects the RBA to leave the cash rate at 4.35% and remain on hold for the rest of 2026. Growth is slowing, inflation has been below the RBA’s previous forecasts and the labour market has eased faster than expected.
CBA still expects the RBA to warn that it could raise rates again if inflation returns. It believes the RBA will probably lower its near-term inflation forecasts and raise its unemployment forecast.
Commerzbank also expects no change. It sees some risk of a slightly hawkish surprise because the market has already removed much of its RBA hike pricing. However, Commerzbank believes the RBA’s next move will eventually be a cut and expects this to weigh on the AUD over the medium term.
Westpac forecasts AUDUSD around 0.71 in September. Marc to Market identifies resistance near 0.7120, although it warns that short-term momentum is becoming stretched.
AUDUSD has a mild upside bias into the meeting, especially if the RBA keeps its inflation warning. The medium-term view is less positive because domestic growth, housing and Chinese demand are weakening.
NZDUSD
NZDUSD is trading close to 0.59, supported mainly by the weaker USD and improved global risk sentiment.
BNZ expects the NZD to strengthen gradually over the medium term. However, it says low relative interest rates, spare capacity in the labour market and political uncertainty could limit near-term gains.
Westpac notes that New Zealand unemployment has reached 5.6%, showing that the labour market remains weak. Inflation is still elevated, which creates a difficult balance for the RBNZ.
The short-term bias is mildly bullish because of USD weakness. A clean move above 0.60 may still require stronger New Zealand data or clearer evidence that the RBNZ will tighten again.
USDCAD
USDCAD has broken below 1.40 after Canadian and US employment data moved sharply in opposite directions.
Commerzbank notes that Canada added around 75,000 jobs, compared with expectations for 20,000. Unemployment fell to 6.4%, its lowest level in two years. Canadian GDP, manufacturing activity and exports have also improved recently.
Scotiabank sees moderate downward pressure on USDCAD and identifies 1.3900 as an important near-term level.
Commerzbank remains positive on the Canadian dollar over the coming months, but warns that US trade policy could interrupt the recovery. The US has threatened new 50% tariffs on some Canadian goods if no agreement is reached by 19 August.
The bias is bearish. Strong Canadian data and weaker Fed expectations favour CAD, but tariff headlines remain the main risk to the view.
Other Pairs
Commerzbank believes a lasting reopening of the Strait of Hormuz could favour SEK over NOK. Lower oil prices would remove support from the oil-sensitive Norwegian krone, while Sweden would benefit from reduced energy costs.
Commerzbank also says Chinese domestic demand remains weak. Imports appear strong in headline terms, but much of the increase reflects higher technology prices. Weak Chinese consumer inflation and falling monthly prices remain a concern for AUD and other China-sensitive currencies.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Mildly bearish | Weak payrolls, slower wages and lower Fed hike expectations |
| EURUSD | Mildly bullish | Softer USD and lower US yields, with resistance near 1.1630 |
| GBPUSD | Mildly bullish | USD weakness and resilient UK growth, with resistance above 1.35 |
| USDJPY | Bearish | Narrower yield spreads and intervention risk |
| AUDUSD | Mildly bullish | Possible hawkish RBA hold and softer USD, limited by weaker growth |
| NZDUSD | Mildly bullish | USD weakness, limited by a soft New Zealand labour market |
| USDCAD | Bearish | Strong Canadian jobs and weaker US employment, with tariff risk |
| NOKSEK | Bearish | Lower oil prices could favour SEK over NOK |
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Key Event Outlook
United States
Wednesday’s CPI report is the main event of the week.
Lloyds Bank expects headline CPI to rise by 0.1% in July, taking annual inflation down to 3.4%. It expects core inflation of 0.2% monthly and 2.5% annually.
CBA expects both headline and core prices to rise by 0.2%. It sees upward pressure from computers and airfares, partly offset by lower petrol prices.
Commerzbank says soft inflation could mark another step towards the end of Fed hike expectations. Strong inflation would support the CBA and Danske Bank view that the Fed could still raise rates in December.
US PPI is due Thursday. Retail sales and University of Michigan sentiment follow Friday. CBA expects retail sales to rise by 0.4%, while Lloyds Bank expects a softer 0.1% increase.
Eurozone
Industrial production is due Thursday, followed by updated GDP, employment and trade data on Friday.
Lloyds Bank expects the second GDP estimate to confirm quarterly growth of 0.4%. A firm result would support the ECB’s cautious tightening bias.
Commerzbank says the euro remains highly sensitive to energy prices. Progress towards reopening the Strait of Hormuz would help growth, but it could also lower inflation and reduce ECB hike expectations.
United Kingdom
Second-quarter GDP is due Thursday.
Lloyds Bank expects growth of 0.5%, above the Bank of England’s 0.3% forecast. CBA expects 0.4% and believes the underlying economy may be softer than the headline data suggests.
A result around 0.5% would support GBP and keep the BoE focused on inflation. A weaker result would make it harder for GBPUSD to hold above 1.35.
Japan
The yen will remain sensitive to US yields and official intervention warnings.
USDJPY has already responded strongly to weaker US employment data. Soft US CPI could push the pair closer to support below 156, while strong inflation could bring 160 back into focus.
Australia
The RBA announces its policy decision Tuesday.
CBA, Lloyds Bank, Westpac and Commerzbank all expect the cash rate to remain at 4.35%. The main question is whether the RBA continues to warn that another hike remains possible.
CBA expects weaker inflation forecasts and a higher unemployment forecast. Commerzbank sees some risk of a hawkish market reaction because traders have already removed much of their previous RBA hike pricing.
Governor Bullock appears before Parliament on Friday. CBA expects her to repeat the RBA’s concern about elevated inflation and the risk of renewed Middle East cost pressures.
New Zealand
The RBNZ inflation expectations survey is due Thursday, followed by manufacturing PMI and migration data Friday.
High inflation expectations would support the NZD by keeping future tightening risks alive. Weak activity data would reinforce concerns about spare capacity and limit the currency’s upside.
Canada
Canada has a quieter domestic calendar, leaving US data, oil prices and trade headlines as the main drivers of USDCAD.
Commerzbank says the recent improvement in Canadian employment, GDP, manufacturing and exports supports CAD. However, the 19 August US tariff deadline creates a clear risk.
Other / Geopolitics
CBA reports that Iran and Oman remain short of an agreement to reopen the Strait of Hormuz. Iran has ruled out direct talks with the US and renewed its conditions for peace.
Lloyds Bank says the speed of any reopening will be an important guide to the normalisation of oil flows. Risks also remain around Red Sea shipping.
A deal would likely lower oil, bond yields and inflation expectations. Renewed escalation could support the USD through safe-haven demand and help energy exporters such as Canada, while hurting energy importers in Europe and Asia.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
Sources
- CBA Economics Daily Alert, 10 August 2026
- Commerzbank Currency Research, 7-10 August 2026
- Danske Bank Weekly Focus, 7 August 2026
- Lloyds Bank Market Insights Weekly, 7 August 2026
- Marc to Market Week Ahead, 8 August 2026
- Westpac Australia and NZ Weekly, 10 August 2026
- BNZ Markets Research
- Scotiabank CAD Weekly
- Scotiabank Global Foreign Exchange
