Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.
USD
The dollar starts the week looking more two-way after a strong run. Barclays says lower oil prices should ease inflation pressure and help sentiment, but Chair Warsh’s Fed agenda could still bring fresh volatility. The key issue is that US inflation is still above target, while labour market data is starting to look softer.
Westpac notes that US payrolls disappointed in June, with only 57k jobs added and earlier months revised lower. That has made markets less certain that the Fed needs to keep hiking. Scotiabank also says the FOMC minutes could reveal more about the “family fight” inside the Fed under Warsh.
Commerzbank says gold has gained as softer US jobs data cooled expectations for Fed tightening. BNZ also notes that the USD’s strong two-month rally appeared to break last week, helped by softer payrolls and stretched long dollar positioning.
For traders, the USD is no longer a clean buy. It still has rate support, but weaker jobs and lower oil prices are limiting upside. The next move depends on whether US services data and the FOMC minutes keep the Fed hawkish, or confirm that the dollar rally has lost momentum.
EURUSD
EURUSD is being helped by lower oil prices and a softer USD tone. Barclays says Euro Area inflation eased in June, while ECB speakers at Sintra kept all policy options open. Barclays still expects another 25bp ECB hike in September, but lower oil prices could make the ECB less aggressive.
Lloyds says the fall in oil, lower geopolitical risk and weaker inflation pressure have changed the macro outlook for central banks. The bank says markets have already scaled back ECB hike expectations, with the next hike now only fully priced for March 2027.
Westpac also notes that Euro Area inflation was softer than expected, with headline inflation falling to 2.8% and core inflation easing to 2.4%. That makes the ECB’s job easier, but it also reduces the urgency for another hike.
For traders, EURUSD can stay supported while oil falls and the Fed debate turns less clearly hawkish. But if the ECB starts sounding less proactive, upside may slow.
GBPUSD
GBPUSD is caught between sticky UK policy support and political risk. Barclays notes that Governor Bailey said rate cuts are “off the table” for now, which should give GBP some support. But Barclays also expects UK growth to slow after Q1 GDP was confirmed at 0.6% q/q.
Lloyds says the UK focus now shifts to the Labour leadership contest, the next Chancellor, and how new defence spending will be funded. That matters because markets have been sensitive to UK fiscal risk before.
The key issue for sterling is whether the BoE can stay hawkish while growth slows. If Bailey and other BoE speakers keep pushing back against rate cuts, GBP should hold up. But if politics raise fresh worries about spending and fiscal discipline, sterling could come under pressure.
For traders, GBP has some support from the BoE’s higher-for-longer message, but political and fiscal headlines could make rallies fragile.
USDJPY
USDJPY remains high and intervention risk is still a major issue. Commerzbank notes USDJPY traded around 161.30, while BNZ says the yen fell to a fresh 40-year low against the USD before reports of possible changes to Japan’s intervention approach.
Barclays says Japan’s upbeat Tankan and stronger inflation signals support its BoJ hike outlook. Westpac also says the Tankan suggests the BoJ still needs to keep normalising policy, even if smaller business and services signals were weaker.
The pair is still being driven by wide rate gaps. The US still offers much higher yields than Japan, and that keeps carry demand strong. But the higher USDJPY goes, the more likely traders are to worry about intervention or a stronger BoJ response.
For traders, USDJPY remains supported, but it is stretched. Any stronger BoJ signal, wage upside, or intervention headline could trigger sharp pullbacks.
AUDUSD
AUDUSD is getting help from better risk sentiment, lower oil prices and firmer commodities. Westpac says the Aussie strengthened against the USD and most major currencies, with AUDUSD up to 0.6940 and the TWI up 0.5%.
Westpac also notes that iron ore rose 1.0% and copper rose 0.3%, which helped the AUD tone. The RBA remains important too. Westpac says markets are still not fully convinced of another RBA hike this cycle, even though the RBA continues to watch inflation closely.
The China story is mixed. Barclays says China is still seeing an export-led recovery, but domestic demand, labour and property remain weak. Westpac makes a similar point: China’s industrial strength is strong, but the consumer remains the big missing piece.
For traders, AUD can benefit from global risk-on and commodity support, but China’s weak domestic demand may cap rallies.
NZDUSD
NZDUSD has the clearest event risk this week because banks are split on the RBNZ. BNZ expects the RBNZ to hike 25bp to 2.50%, saying inflation risks are not dead and policy is still too stimulatory. BNZ also says a hike would likely be NZD-positive because it is not fully priced.
Westpac disagrees. Westpac expects the RBNZ to hold at 2.25%, arguing that the sharp fall in oil prices gives the Bank more time to wait for data. Westpac says the RBNZ should keep a tightening bias, but make the message more data dependent.
Scotiabank sits between the two. It says markets price about three-quarters of a hike, but the option to hold and monitor inflation may be attractive to enough RBNZ members.
For traders, the risk is binary. A hike could squeeze NZDUSD higher, but BNZ warns upside may still be capped by low NZ rates versus peers. A hold could hurt NZD, especially if guidance sounds less urgent.
USDCAD
USDCAD is mainly about oil and Canadian jobs. Lower oil can be a headwind for CAD, but the move is not simple because lower energy prices also reduce inflation pressure and support global risk sentiment.
Scotiabank says OPEC+ faces more than just the August production quota debate, because Hormuz traffic is still far from normal and the outlook for Iranian supply is uncertain. Commerzbank also says oil markets are now dealing with supply increases, recovering Hormuz traffic, and the risk of a crude glut.
On data, Scotiabank expects Canada’s June jobs report to show a more moderate gain after the prior 88k jump, with unemployment flat at 6.6%. CBA also expects slower employment growth and sees unemployment holding at 6.6%.
For traders, CAD needs a decent jobs print to offset lower oil and keep USDCAD contained. A weak labour report could push USDCAD higher.
Other Pairs
Commerzbank says oil and gas shipping through a US-protected Hormuz corridor is recovering, but the Strait remains a diplomatic flash point. This matters for safe havens and oil-linked FX. If shipping stress returns, USD, CHF and gold may benefit, while AUD, NZD and CAD could become more volatile.
Barclays says Korea’s semiconductor exports remain strong, and Singapore’s July policy review is becoming a closer call. That keeps Asian FX in focus, especially SGD and KRW.
Westpac sees a stronger long-term CNY path if China can restore consumer confidence and keep GDP growth around 4.5%. But Westpac also says AUD may lag because Australia may not get a large direct commodity volume boost from China’s growth model.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Neutral to slightly bullish | Fed still hawkish, but jobs are cooling and oil is lowering inflation pressure |
| EURUSD | Mildly bullish | Lower oil helps Europe, softer USD tone, ECB still open to another hike |
| GBPUSD | Neutral | BoE not cutting, but UK politics and slower growth limit upside |
| USDJPY | Bullish but stretched | Wide rate gap supports USD, but intervention and BoJ risks are rising |
| AUDUSD | Mildly bullish | Better risk sentiment, commodities firmer, but China demand still weak |
| NZDUSD | Event-driven | RBNZ decision is split; hike supports NZD, hold likely weighs |
| USDCAD | Neutral to mildly bullish | Lower oil weighs on CAD, Canada jobs are key |
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Key Event Outlook
United States
The main US events are ISM services and the FOMC minutes. Scotiabank says the minutes may add colour to the Fed debate under Warsh, especially after markets treated the June meeting as more hawkish than the Fed may have intended.
Westpac says softer payrolls and lower oil prices should reduce fears of a sustained inflation re-acceleration. Lloyds says ISM services, especially the prices paid component, will test whether the disinflation story is real.
For FX, weak services data or cautious minutes would pressure USD. Strong data or hawkish Fed language would help the dollar recover.
Eurozone
Eurozone retail sales, PPI, ECB minutes and ECB speakers are in focus. Barclays says the ECB is keeping options open, while Lloyds says lower oil prices mean markets have already reduced rate hike expectations.
The ECB minutes may be treated as a little dated because oil has fallen sharply since the June meeting. Traders will focus more on whether ECB speakers push back against lower hike pricing or accept a slower policy path.
For EUR, the key question is whether lower oil supports growth enough to offset a less hawkish ECB.
United Kingdom
The UK has construction PMI, jobs data, RICS house prices and political headlines around the Labour leadership process. Barclays says Bailey has ruled out rate cuts for now, but UK growth is expected to slow.
Lloyds says markets are watching Andy Burnham’s policy agenda, who becomes Chancellor, and how new spending plans will be funded. That makes fiscal credibility a key GBP driver.
GBP should be supported if data stabilises and fiscal messaging stays credible. It could weaken if politics raise fresh concerns about borrowing or spending.
Japan
Japan wage data is important because stronger wages support the BoJ normalisation story. BNZ says labour cash earnings will be watched as a firming wage-price cycle is a condition for more BoJ tightening.
Barclays also says the Tankan backs its BoJ hike outlook. The policy story is slowly becoming more supportive for JPY, but USDJPY is still dominated by US yields and wide rate spreads.
For USDJPY, stronger wages could increase intervention and BoJ tightening pressure.
Australia
The main Australian event is RBA Assistant Governor Sarah Hunter speaking on supply shocks and monetary policy. Westpac says the RBA still sees excess demand and inflation pressure, but markets are not fully convinced another hike is coming.
Australia also has the Melbourne Institute inflation gauge, ANZ job ads and CBA wage and labour insights. These will help shape expectations before the next RBA decision.
AUD will be sensitive to any signal that the RBA remains open to more tightening, but China and risk sentiment remain just as important.
New Zealand
The RBNZ decision is the biggest local FX event. BNZ expects a 25bp hike to 2.50%, while Westpac expects a hold at 2.25% with a data-dependent tightening bias.
CBA also expects the RBNZ to hold, arguing that lower oil prices have reduced the need for an immediate move. Scotiabank says the market is leaning toward a hike, but the decision is not certain.
A hike should support NZD, while a hold would likely weigh unless the guidance stays clearly hawkish. New Zealand manufacturing PMI and the Matariki public holiday also feature later in the week.
Canada
Canada jobs are due Friday. Scotiabank expects a smaller gain after the prior 88k surge and sees unemployment flat at 6.6%. CBA also expects employment growth to slow and unemployment to remain at 6.6%.
The BoC surveys are also important because inflation expectations remain a key risk. Scotiabank says consumer and business inflation expectations may rise further, which matters for the BoC’s policy outlook.
For CAD, a solid jobs print and firm inflation expectations could reduce BoC easing hopes. A weak labour report would likely weigh on CAD.
Other / Geopolitics
The NATO summit and the Strait of Hormuz remain key risk events. Scotiabank says the NATO summit could amplify divisions, while Commerzbank says Hormuz remains a flash point even after the US-Iran interim deal.
OPEC+ supply increases add another layer. Lower oil helps inflation and risk sentiment, but it can hurt oil-linked currencies like CAD. If Hormuz stress returns, safe-haven demand could quickly come back.
For traders, lower oil is generally positive for risk and EUR, but any renewed shipping stress could lift USD, CHF and gold while weighing on AUD, NZD and CAD.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
