The Brazilian real strengthened sharply to below 5.00 per USD on Monday, reaching a 17-month high after Flávio Bolsonaro finished ahead of President Lula in the first round of the presidential election, defying most polls. Senator Bolsonaro received 47.1% of valid votes, compared with 45.1% for President Lula. Bolsonaro is viewed by markets as more fiscally restrictive, amid elevated domestic yields and weak business activity. The two-point margin gave the senator an initial advantage heading into the runoff. Bolsonaro outperformed the average of polls tracked by Goldman Sachs by more than four percentage points. However, the election remains unresolved, and the narrow first-round margin means volatility could remain elevated as the campaign enters its final weeks. The runoff, scheduled for October 25th, will still depend on factors including debate performances, campaign strategies, voter mobilization and the candidates’ ability to attract supporters of eliminated candidates.

Brazilian Real Surges After Bolsonaro Leads First Round

The South African rand approached 16.7 per USD, a low level since late July, pressured by a stronger dollar and ongoing risk aversion. The currency has remained under pressure following a volatile September, with rising Middle East tensions, inflation concerns and weaker commodity prices. A looming fuel-price hike is adding to uncertainty over the inflation outlook. Meanwhile, a fresh PMI survey showed a renewed contraction in the country’s private sector in September, the weakest performance so far this year.

South African Rand Under Pressure

The Brazilian real is expected to strengthen on Monday after fluctuating near a six-month low last week, as investors react to Flávio Bolsonaro’s stronger-than-expected performance in the first round of the presidential election. Bolsonaro secured 47.03% of valid votes, ahead of incumbent Luiz Inácio Lula da Silva at 45.16%, setting up a runoff on October 25. The result is likely to be viewed positively by investors who see Bolsonaro as more inclined to address Brazil’s fiscal pressures and reduce government spending. Markets may therefore price in a greater probability of fiscal adjustment and potentially lower borrowing costs over time. However, the election remains unresolved, and the narrow first-round margin means volatility could remain elevated as the campaign enters its final weeks.

Brazilian Real to Rally from 6-Month Low

The Indonesian rupiah slipped toward IDR 17,950 per U.S. dollar on Monday after briefly firming to around IDR 17,850 in the previous session. The weakness came as the dollar index held near an 18-month high, despite traders scaling back bets on an imminent Federal Reserve rate hike following soft U.S. jobs data. Caution prevailed ahead of key domestic releases this week, including September forex reserves and August retail sales. Meanwhile, Indonesia’s external position remained fragile despite an August trade surplus, with elevated imports and energy costs weighing on the balance amid Middle East uncertainty. Still, fiscal conditions stayed supportive, with the deficit contained through August, providing some support for the rupiah. Local media also said Bank Indonesia could raise its benchmark rate to 6% in the coming months as rising food and energy costs and recent rupiah weakness heighten inflation risks. In September, annual inflation accelerated to 3.28%, a three-month high.

Rupiah Eases Ahead of Key Local Data

The euro continued to depreciate around $1.117 on Monday, its weakest level since May 2025, as mounting fiscal and political concerns in the region weighed on the currency. Spanish government and Socialist party officials are reportedly backing an early election after Prime Minister Pedro Sánchez’s government suffered a major parliamentary defeat last week, adding to concerns over France’s political stability and budget outlook. On the monetary policy front, the ECB is expected to take a cautious approach to further tightening as elevated energy prices raise inflation risks while weighing on growth. Eurozone inflation accelerated to 3.8% in September, its highest in three years and well above the ECB’s 2% target. Meanwhile, the dollar remained firm despite softer-than-expected US jobs data, adding to downward pressure on the euro even as expectations for a Federal Reserve hike this month were reduced.

Euro Hits 17-Month Low

The South Korean won traded around 1,345 per dollar, approaching its strongest level since October 2024, as record exports and a large trade surplus drove substantial dollar inflows. September exports surged 83.5% year-on-year to a record $120.9 billion, led by a 262.8% jump in semiconductor shipments to $60.3 billion, while the trade surplus widened to a record $49.85 billion. Additionally, consumer prices rose 2.9% year-on-year in September, and petroleum prices remained elevated, leaving limited room for near-term BOK easing. Meanwhile, US Treasury yields stayed near multi-decade highs, with the 10-year yield around 5.3% and the 30-year yield near 5.6%, keeping the dollar relatively firm at its highest level in over a year. At the same time, uncertainty surrounding Korea’s trade and investment commitments with the US has increased amid disagreements over Alaska LNG and broader tariff threats.

South Korean Won Firms Near 2024 High

The Indian rupee hovered around 96.2 per dollar, pausing losses after reaching two-month lows as softer oil prices and fading bets on a Federal Reserve rate hike this month offered some relief to the currency. Oil prices slipped as rising crude exports from the Middle East and stockpile releases by Group of Seven nations eased supply concerns, while weaker-than-expected US jobs data reduced the probability of a Fed hike to around 20%. However, the dollar remained firm near a 17-month high and elevated US Treasury yields continued to weigh on the rupee. The RBI remained a consistent presence in the foreign exchange market, helping contain the rupee’s decline, although the decisive breach of the 96-per-dollar level has heightened the risk of further weakness. Meanwhile, markets are increasingly pricing an RBI rate hike this week as inflationary pressures broaden, with consumer inflation at 4.82% in August and growth at 7.8% in Q2.

Rupee Pauses Slide on Lower Oil, Fed Bets

The Japanese yen was little changed around 157.8 per dollar on Monday, remaining in a sideways range for roughly two weeks now as traders awaited a series of economic reports due this week. Key releases include August wage, current account and household spending data, along with September figures for consumer confidence and machine tool orders. Last week, a summary of opinions from the Bank of Japan’s September meeting pointed to a growing focus on preventing inflation from rising above the central bank’s 2% target, signaling the possibility of another rate increase this year but offering little clarity on its timing ahead of policy decisions in October and December. Meanwhile, the yen remained under pressure from a strong dollar and elevated Treasury yields, even as weaker-than-expected US jobs data reduced pressure on the Federal Reserve to raise interest rates further.

Yen Holds Steady as Traders Await Economic Data

The New Zealand dollar fell to around $0.559, hovering at its lowest level since November 2025, as continued strength in the US dollar weighed on the currency. The greenback rose despite a soft US jobs report on Friday, which tempered expectations for a Federal Reserve rate hike later this month. Meanwhile, elevated energy prices are threatening New Zealand’s already fragile economy, given the country’s reliance on imported energy. While the recent spike in oil prices raised upside risks to inflation and reinforced the case of further rate hikes from the Reserve Bank of New Zealand, it is also squeezing household purchasing power and increasing operating costs for businesses, potentially weakening domestic demand. Political uncertainty ahead of November’s general election has also added to pressure on the currency.

New Zealand Dollar Remains Subdued

The Australian dollar hovered below $0.70, trading near multi-month lows as a stronger US dollar and elevated Treasury yields continued to weigh on the currency. After posting its fourth consecutive weekly decline last week, the Aussie remained under pressure despite the Reserve Bank of Australia raising its cash rate to a 15-year high of 4.6% in September, as August inflation came below estimates, reducing bets on another rate increase in November. Meanwhile, the US dollar has remained firm, supported by elevated Treasury yields, which have enhanced the appeal of US assets, while a broad global selloff in government bonds has also fueled safe-haven demand for the greenback. A weaker-than-expected US jobs report provided some relief for the Aussie, as markets largely priced out the prospect of another Federal Reserve interest rate hike this month. Elsewhere, investors continued to monitor escalating Middle East tensions and the resulting inflation risks from higher oil prices.

Australian Dollar Trades Near Multi-Month Lows

The dollar index held firm around 102 on Monday, staying close to its highest level since April 2025 even as traders scaled back expectations for an imminent Federal Reserve rate hike following weaker-than-expected US jobs data. The greenback also continued to benefit from weakness in the euro, amid rising fiscal debt and ongoing political gridlock in France. Meanwhile, data released Friday showed the US economy added just 29,000 jobs in September, well below expectations of 90,000, following a downwardly revised gain of 133,000 in August. The unemployment rate climbed to 4.2%, while annual wage growth unexpectedly slowed to 3.0%, its weakest pace since May 2021. Markets are now pricing in nearly an 80% chance that the Fed will keep policy unchanged this month, while expectations for a December hike remained around 69%.

Dollar Holds Near 18-Month High

The Canadian dollar weakened slightly to around 1.42 per US dollar in September, its lowest level in about 12 weeks, as stalled domestic growth and US dollar strength kept the loonie under pressure. Advance estimates showed real GDP increased 0.2% in August, with gains in mining and quarrying and retail trade partly offset by a decline in oil and gas extraction. GDP was essentially unchanged in July, ending a three-month run of growth. The result was in line with expectations but highlighted a weaker start to the third quarter. Soft GDP reinforced expectations for the Bank of Canada to hold rates. The US ban on various Canadian goods imports also took effect. Meanwhile, the US dollar climbed against a basket of major currencies as markets increased bets on further Federal Reserve rate increases. Expectations for a widening US-Canada interest-rate differential are reinforcing the greenback’s advantage over the loonie.

Canadian Dollar Nears 12-Week Low

Sterling extended gains above $1.32, recovering from its weakest level in three months as weaker-than-expected US employment data weighed on the dollar. The US economy added just 29,000 jobs in September, well below expectations of 90,000, strengthening expectations that the Federal Reserve may leave rates unchanged in October, while a December move is seen as more likely. Meanwhile, markets are pricing around 30 basis points of Bank of England tightening by year-end and roughly 90 bps by the end of 2027. Several policymakers, including Governor Andrew Bailey, have signaled greater openness to higher rates as rising energy costs increase the risk of inflation remaining above target. Elsewhere, sterling received support from comments by Prime Minister Andy Burnham favoring closer UK-EU ties ahead of a summit expected around November 20, including the possibility of revisiting EU membership after the next general election.

Sterling Rebounds as Weak US Jobs Data Weighs on Dollar

The euro edged up to $1.126 after briefly falling to its lowest level in more than a year, as weaker-than-expected US employment data weighed on the dollar. The US economy added just 29,000 jobs in September, well below expectations of 90,000, raising expectations that the Federal Reserve may keep interest rates unchanged at its upcoming meeting. Meanwhile, stronger-than-expected Eurozone inflation showed annual inflation accelerating to 3.8%, its highest level since September 2023 and well above the ECB’s 2% target, largely due to higher fuel prices. Despite renewed inflationary pressures, the euro remains under pressure as markets expect the ECB to tighten policy more gradually. ECB Executive Board member Isabel Schnabel said the coming months would be important for assessing the impact of the energy shock and determining the appropriate level of interest rates, signaling a cautious approach. The Eurozone’s weak growth outlook could also constrain further tightening.

Euro Rebounds as Weak US Jobs Data Weighs on Dollar

The dollar index slipped below 102 on Friday, ending a four-session advance as unexpectedly weak US employment data reduced expectations for further Federal Reserve tightening. Nonfarm payrolls increased by just 29,000 in September, falling short of estimates. The figures also incorporated downward revisions to employment growth in the previous two months. Meanwhile, the unemployment rate edged up to 4.2%, pointing to a more cautious hiring environment as businesses contend with higher costs. The disappointing report prompted money markets to scale back expectations of an interest-rate increase at the Fed’s October meeting. Falling oil prices provided additional support, with Brent crude dropping below $100 a barrel and easing some concerns over energy-driven inflation. Despite Friday’s decline, the dollar remained on track for a 0.9% weekly gain, which would mark its third consecutive weekly advance.

DXY Snaps 4-Day Gain After Jobs Report

The Swiss franc rose to 0.82 per USD, recovering from a 16-month low, as concerns over debt affordability in its European peers raised demand for save-haven assets. Elevated energy prices continue to underpin concerns over government's debt and expenditures, supporting both the greenback and Swiss franc. Providing an offsetting pressure, the franc’s appeal as a funding currency for carry trades has increased. Carry trades involve investors borrowing in a low-yielding currency to fund the purchase of a currency with higher yields, putting downward pressure on the currency. Contrasting with other central banks, the Swiss National Bank left its key rate unchanged at 0% at its September meeting, leaving borrowing costs at the world’s lowest level for more than a year while scaling back its threat of currency intervention. Although markets still expect the SNB to deliver a rate hike by year-end and roughly three hikes by the end of 2027, many analysts view these expectations as overdone.

Swiss Franc Strengthens From 16-Month Low

The euro remained below $1.13, close to its lowest level since May 2025, despite stronger-than-expected Eurozone inflation data. Annual inflation accelerated to 3.8% last month, its highest level since September 2023 and well above the ECB’s 2% target, driven largely by higher fuel prices. Despite the renewed inflationary pressure, the euro remains under pressure as markets expect the ECB to tighten monetary policy more gradually than the Federal Reserve. Further ECB rate hikes are priced in over the coming year, with the next move potentially coming as early as December. ECB Executive Board member Isabel Schnabel said Wednesday that the coming months would be important for assessing the impact of the energy shock and determining how high interest rates need to rise. Her comments suggest a cautious, wait-and-see approach as the US-Iran conflict enters its eighth month. The eurozone’s weak outlook could also limit aggressive ECB tightening, with GDP seen growing just 0.9% this year.

Euro Holds Near Recent Low Despite Stronger Inflation

The New Zealand dollar steadied around $0.561, close to its weakest level since November 2025, and was on track for its longest streak of weekly losses since early 2025. The kiwi has been pressured by a strengthening US dollar and a sharp rise in oil prices, which is threatening New Zealand’s fragile economic recovery. While more expensive energy is adding to inflationary pressures and reinforcing expectations of further Reserve Bank of New Zealand rate hikes, it is also eroding household purchasing power and raising business costs, potentially weighing on domestic demand and growth. Political uncertainty ahead of November’s general election has also added another headwind for the currency. The kiwi was down about 0.8% this week, extending its losing streak to six weeks.

New Zealand Dollar Languishes Near Multi-Month Lows

The South Korean won traded around 1,357 per dollar, holding range-bound, supported by strong semiconductor demand and Korea’s robust export performance. September exports surged 83.5% year-on-year to a record $120.9 billion, while semiconductor exports jumped 263% to a record $60.3 billion, driving a record trade surplus of $49.85 billion. Strong export receipts lifted residents’ foreign-currency deposits to a record $140.62 billion in August. Authorities also stepped up measures to stabilize the domestic bond market amid the global sell-off. Meanwhile, higher US Treasury yields remained an offset, with the 10-year yield around 5.3% and the 30-year yield above 5.6%, both near multi-decade highs. Oil prices also climbed above $100 a barrel amid renewed tensions in the Middle East. At the same time, Korea’s CPI held at 2.9% in September, while the BOK warned inflation could stay around 3% in October, raising the prospect of another rate hike.

South Korean Won Steady on Export Growth

The Indonesian rupiah hovered around IDR 17,900 per U.S. dollar on Friday, struggling to move away from the IDR 18,000 level hit earlier this week. A persistently strong dollar continued to weigh on sentiment, with the greenback holding near an 18-month high amid expectations for further Fed tightening as inflation remains elevated and Middle East uncertainty adds to risks. Meanwhile, Bank Indonesia Governor Destry Damayanti said recent rupiah pressure reflected global conditions, shifts in capital flows and weaknesses in external-sector fundamentals. Locally, September headline inflation accelerated to a three-month high, driven by persistent food-price pressures partly linked to El Niño effects. For the week, the rupiah is on track to log its third consecutive weekly decline, down around 0.1% so far. Traders now await September foreign-exchange reserves, consumer confidence and August retail sales data next week.

Rupiah Set for Third Weekly Decline as Dollar Holds Firm

The Australian dollar was little changed below $0.70, near multi-month lows as the greenback extended its bull run on surging US Treasury yields. The Aussie is heading for a fourth straight week of losses despite the Reserve Bank of Australia raising its cash rate to a 15-year high of 4.6% in September, as investors saw limited scope for further tightening while policymakers assess the impact of previous hikes. A sharp downturn in the housing market and a steady rise in unemployment have further reduced expectations for another rate increase, with markets pricing a 22% chance of an October hike and 38% for December. Meanwhile, the US dollar remained broadly stronger on robust economic data, elevated Treasury yields and heightened Middle East geopolitical uncertainty. Higher US yields have narrowed the yield premium on Australian debt to its smallest in a year, reducing support for the currency. The Aussie drew some indirect support from a weaker euro amid concerns over French debt.

Aussie Dollar Heads for 4th Weekly Loss

The Japanese yen strengthened slightly below 158 per dollar on Friday, trimming recent losses after data showed Tokyo’s core inflation accelerated to 2.7% in September, exceeding the Bank of Japan’s 2% target for the first time in nine months. However, a summary of opinions from the central bank’s September meeting offered fewer hawkish signals than investors had anticipated. The summary showed the central bank shifting its focus toward preventing inflation from exceeding its target, pointing to another rate increase this year, but provided little clarity on the timing. The yen also remained on track for a third consecutive weekly decline, pressured by a stronger dollar and elevated Treasury yields amid expectations that the Federal Reserve may need to raise interest rates further to contain energy-driven inflation. This points to the possibility of wider US-Japan interest-rate differentials, as the Fed’s tightening cycle has continued to move ahead of the BOJ’s rate hikes.

Yen Steadies After Hot Tokyo Inflation Data

The dollar index strengthened above 102 on Friday and was on track for a third consecutive weekly gain, supported by robust US economic strength, elevated Treasury yields and heightened geopolitical uncertainty in the Middle East. Treasury yields surged to their highest levels since 2002 this week, widening the dollar’s interest-rate differential over other major currencies. Investors also assessed signs of a resilient US labor market ahead of the September jobs report. Minneapolis Fed President Neel Kashkari said it remains unclear how high interest rates will need to rise to bring inflation under control, emphasizing that the Fed must take the necessary steps to return inflation to its target. Meanwhile, oil prices climbed as the US considered deploying an additional aircraft carrier and 10,000 troops to the Middle East, raising concerns over further disruptions to regional energy supplies and renewed inflationary pressures.

Dollar Heads for 3rd Straight Weekly Rise

The Mexican peso weakened to around 18.4 per US dollar in October, nearing a one-year low and tracking gains by the US currency against other emerging-market currencies. The dollar strengthened amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. The narrowing interest-rate differential is also undermining the appeal of the Mexican currency. Narrower yield spreads between Mexico and developed economies, combined with expectations that Banxico will keep monetary policy stable, are reducing the incentive for peso carry-trade strategies.

Mexican Peso Weakens Toward One-Year Low

The Brazilian real weakened to near 5.23 per USD in October, tracking gains by the US currency against other emerging-market currencies. The dollar followed an upward trend against several emerging-market currencies amid expectations of further Fed tightening, as elevated inflationary pressures stemming from the Middle East situation coincided with resilient US economic performance. With the election approaching, financial markets are also being influenced by political developments, with recent polls reinforcing expectations of a tight presidential race. On the data front, Brazil’s manufacturing sector posted its sharpest deterioration in operating conditions since April 2023, according to S&P Global PMI data. Recent labor market data remained consistent with gradual cooling and expectations for GDP to be near flat in 3Q26, despite strong payrolls, keeping expectations for continued Selic easing intact.

Brazilian Real Under Pressure Ahead of Election

The dollar index extended gains for a fourth consecutive session, starting Q4 on a firm footing and trading above 101.8, its highest level since April 2025. The index also extended its 2% advance in September, continuing to benefit from expectations of further Fed tightening amid elevated inflationary pressures stemming from the situation in the Middle East and resilient US economic performance. Comments from several Fed officials also reinforced expectations for further rate hikes. Minneapolis Fed President Kashkari said on Wednesday that price pressures remained elevated, even after PCE inflation, the Fed’s preferred inflation gauge, came in below expectations. Traders have fully priced in another 25bps Fed rate hike this year and nearly four additional hikes by the end of next year. However, the probability of a hike at the October meeting has fallen to around 37%, down from roughly 70% last week. The greenback was mostly higher against the yen, the pound and the euro.

Dollar Index Highest in 17 Months

Sterling weakened to around $1.32 at the start of October, near three-month lows, after falling 2% against the US dollar in September as rising oil prices fueled inflation concerns, pushed bond yields higher and clouded the UK growth outlook. Oil prices rose as investors weighed increased Middle East energy flows against the ongoing US-Iran impasse. Markets expect the Bank of England to tighten policy more slowly than the Federal Reserve, with LSEG data showing investors pricing in four BoE rate hikes by July 2027, including a first move in November. Several policymakers, including Governor Andrew Bailey, have signaled greater openness to higher rates as energy costs raise the risk of inflation staying above target. In the US, markets still see a near 40% chance of a rate hike this month. Elsewhere, investors welcomed Prime Minister Andy Burnham’s comments on closer UK-EU ties, including the possibility of reopening the question of EU membership after the next general election.

Sterling Slips as Oil Prices Fuel Inflation Concerns

DXY increased to 101.81, the highest since May 2025. Over the past 4 weeks, Dollar Index gained 2.18%, and in the last 12 months, it increased 4%.

Dollar Index Hits 16-month High

The Swedish Krona touched 10.04 against the USD, the lowest since April 2025. Over the past 4 weeks, US Dollar Swedish Krona gained 4.21%, and in the last 12 months, it increased 6.69%.

Swedish Krona Hits 17-month Low

The euro started October weaker, slipping toward $1.13 and its lowest level since May 2025, after falling more than 2% against the dollar in September, its sharpest monthly decline in 14 months. Markets expect the ECB to tighten more slowly than the Fed, with further ECB hikes priced in over the coming year and the next move potentially in December alongside updated economic projections. Meanwhile, inflation accelerated across several major European economies in September, driven largely by fuel prices. ECB official Peter Kazimir said that the central bank has time to keep policy flexible after two rate hikes this year, echoing President Christine Lagarde’s comments earlier this week. A subdued eurozone growth outlook, currently seen at just 0.9% this year, could further constrain the ECB’s room for aggressive tightening. Political uncertainty ahead of elections in France, Spain and Italy next year is also weighing on sentiment toward the single currency.

Euro Slips to Fresh 15-Month Lows

The Japanese yen weakened past 158 per dollar on Thursday, moving toward one-month lows as the summary of opinions from the Bank of Japan’s September meeting fell short of investors’ expectations for stronger hawkish signals from policymakers. The summary showed the central bank shifting its focus toward preventing inflation from exceeding its target, pointing to another rate increase this year, but provided little clarity on the timing ahead of policy meetings in October and December. The yen also faced pressure from a stronger dollar and elevated Treasury yields amid expectations that the Federal Reserve may need to raise interest rates further to contain energy-driven inflation. This supports the prospect of wider US-Japan interest-rate differentials, as the Fed’s tightening cycle continued to outpace the BOJ’s rate hikes.

Yen Weakens as BOJ Summary Disappoints

Indonesia’s rupiah edged lower, hovering near IDR 17,960 per U.S. dollar on Thursday, the first trading day of October, after briefly touching 17,930 in the prior session. Cautious sentiment lingered as the dollar index hit an 18-month high and U.S. Treasury yields rose to multi-year peaks, amid concerns that energy-driven inflation could keep policy tighter for longer. Locally, inflation worries deepened after September headline inflation accelerated to 3.28% yoy, a three-month high, reflecting persistent food-price pressures amid El Niño effects. Elevated crude prices added risks for Indonesia, a net oil importer, by raising import costs and fiscal pressure. Still, some support came from stronger-than-expected August trade data, with the surplus widening sharply as exports rose 6.72%, though imports grew faster at 19.09%. Bank Indonesia continued to bolster liquidity and rupiah stability through secondary-market bond purchases and a mix of spot, DNDF and offshore NDF interventions.

Rupiah Eases Amid Dollar Strength, Inflation Concerns

The Canadian Dollar touched 1.42 against the USD, the lowest since April 2025. Over the past 4 weeks, US Dollar Canadian Dollar gained 2.93%, and in the last 12 months, it increased 2.01%.

Canadian Dollar Hits 17-month Low

DXY increased to 101.61, the highest since June 2026. Over the past 4 weeks, Dollar Index gained 2.02%, and in the last 12 months, it increased 3.84%.

Dollar Index Hits 14-week High

The New Zealand dollar slipped to around $0.562 on the first day of October, hitting its lowest level since November 2025, as broad-based US dollar strength continued to weigh on the currency. The greenback was supported by a sustained rise in US Treasury yields, with elevated oil prices fueling concerns over persistent inflation and reinforcing expectations for further rate hikes by the Federal Reserve. For the same reason, markets have also increased bets on another Reserve Bank of New Zealand rate hike at its October meeting. However, support from rising RBNZ rate expectations has been outweighed by the broader rise in US yields and expectations for tighter Fed policy, keeping the US dollar robust. The prolonged conflict in the Middle East and its inflationary impact also pose risks to New Zealand’s economic recovery, further weighing on sentiment toward the currency.

Kiwi Dollar Falls to Lowest Since November 2025

The Australian dollar weakened to around $0.69, hitting an eleven-week low as the US dollar strengthened on surging Treasury yields, while investors trimmed bets on another near-term RBA rate hike. Markets reduced the odds of another RBA rate increase in November to 20% from 36% previously after August inflation came in slightly below forecasts. The next hike is now seen more likely in March rather than February. Australia's trade data also weighed on sentiment as the trade surplus narrowed to its smallest in three months. Meanwhile, the Aussie finished 3.1% lower last month, partly due to a broadly stronger US dollar and ongoing Middle East tensions. The dollar index climbed to an almost 18-month high despite reduced expectations of another Fed hike this month, as Treasury yields surged to multi-decade peaks on concerns over persistent energy-driven inflation. Oil prices remain elevated as the US and Iran make little progress in talks, despite signs of a recovery in Middle East flows.

Australian Dollar Falls to 11-Week Low

The Japanese yen weakened past 158 per dollar on Thursday, reversing recent gains as the dollar and Treasury yields continued to rise amid expectations that the Federal Reserve may need to raise interest rates further to contain energy-driven inflation. The Japanese currency also remained under pressure from wide US-Japan interest-rate differentials, as expectations for further Fed tightening continued to outweigh the Bank of Japan’s rate hikes. However, softer-than-expected US PCE inflation data prompted traders to reduce bets on a Fed rate hike in October. In Japan, a summary of opinions from the BOJ’s September meeting showed that policymakers saw a need to accelerate the pace of rate hikes or bring them closer to the central bank’s target in the near term. Meanwhile, traders remain alert to the possibility of currency intervention as Japanese authorities have stepped up verbal warnings in recent sessions.

Yen Weakens as Dollar, Treasury Yields Weigh

The dollar index strengthened to around 101.5 on Thursday, nearing its highest level since April 2025 as Treasury yields climbed to multi-decade highs amid concerns that persistent energy-driven inflation could lead to tighter monetary policy. The 10- and 30-year US Treasury yields traded around 5.3% and 5.64%, respectively, with both reaching levels not seen since 2002. Oil prices remain elevated as the US and Iran fail to make headway in negotiations despite signs of a recovery in Middle East flows, raising inflationary risks. Meanwhile, data released Wednesday showed the US PCE price index rose 0.3% in August, below expectations for a 0.4% increase, while core PCE advanced 0.2%, also below forecasts of 0.3%. Markets now see roughly a 38% chance of a Federal Reserve rate hike in October, down from 51% before the PCE data. Investors now turn to the latest weekly jobless claims on Thursday and the September jobs report on Friday.

Dollar Approaches 18-Month High

The Swiss Franc touched 0.84 against the USD, the lowest since May 2025. Over the past 4 weeks, US Dollar Swiss Franc gained 3.4%, and in the last 12 months, it increased 4.82%.

Swiss Franc Hits 16-month Low

AUDUSD decreased to 0.69, the lowest since July 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 3.06%, and in the last 12 months, it increased 5.05%.

Australian Dollar Hits 8-week Low

The Canadian Dollar touched 1.42 against the USD, the lowest since July 2026. Over the past 4 weeks, US Dollar Canadian Dollar gained 2.5%, and in the last 12 months, it increased 1.91%.

Canadian Dollar Hits 12-week Low

The dollar index slipped to 101.1 on Wednesday as softer-than-expected inflation reinforced expectations that the Federal Reserve may leave interest rates unchanged in October. The headline PCE price index rose 0.3% mom, while core PCE, excluding food and energy, increased 0.2%. At the same time, consumer spending remained resilient, with households continuing to purchase vehicles, furnishings and clothing despite elevated gasoline and other costs. Revised data also showed stronger economic growth, with Q2 GDP now estimated at a 2.2%, up from 1.5%, while Q1 growth was revised higher. Hiring by US companies also strengthened in September, suggesting economic activity remains relatively firm. The government’s employment report due Friday is expected to show a 90K increase in payrolls, providing another key input for the Fed ahead of its October 28 meeting. Despite Wednesday’s decline, the dollar has gained more than 1.5% in September and was little changed over the third quarter.

Dollar Slips as Inflation Data Eases Fed Rate Concerns

Sterling edged toward $1.33 at the end of September, recovering from a three-month low of $1.32 earlier in the week, supported by stronger-than-expected GDP data and comments from Prime Minister Andy Burnham on the UK-EU relationship. Still, the pound fell 2% against the dollar over the month, as markets expected the BoE to lag the Fed in tightening. Burnham opened the door to potentially rejoining the EU after the next general election and pledged to outline options for closer ties later this year. Meanwhile, revised data showed UK GDP grew 0.5% in Q2, above the previous estimate of 0.4%. BoE policymakers sent mixed signals, with Alan Taylor playing down the need for rate hikes to address the energy shock, while Governor Andrew Bailey and other MPC members indicated they could support higher rates if inflationary pressures persist. In the US, markets trimmed bets on an October Fed hike after Fed's John Williams said there was time to assess incoming data before raising rates again.

Sterling Recovers but Ends September Lower

The euro ended September near $1.135, close to its lowest level since May 2025, after falling more than 2% against the US dollar over the month, as markets expected the ECB to lag the Fed in tightening. Markets are pricing in further ECB rate increases over the coming year, with the next move potentially coming in December alongside the ECB’s updated economic projections, while expectations for another Federal Reserve hike have remained elevated, although recent comments from New York Fed President John Williams have tempered bets on an October move. Inflation in France and Spain accelerated more than expected in September, although ECB President Christine Lagarde said the recent surge had yet to generate significant second-round effects, pointing to a measured policy response. Weak eurozone growth, seen at just 0.9% this year, could also limit aggressive tightening, while political uncertainty ahead of elections in France, Spain and Italy next year continued to weigh on the currency.

Euro Ends September Under Pressure

The Indonesian rupiah hovered near IDR 17,850 per U.S. dollar on the last trading day of September, rising for a second session after Bank Indonesia emphasised consistent, sustainable interventions and noted its trajectory stayed in line with regional peers. The central bank has shifted its strategy by reducing spot-market interventions to 30% and focusing more on NDFs. Fiscal clarity also improved as Parliament passed the 2027 Budget Bill. Gains were capped, however, as the dollar index stayed firm amid persistent U.S. inflation and hawkish Fed signals. The rupiah is on track to post a monthly drop of about 0.6%, pressured by domestic inflation after annual CPI accelerated to 3.19% in August on higher food costs linked to El Niño. External risks also lingered, with elevated crude prices posing fiscal challenges for energy-import-reliant Indonesia. Still, the rupiah is on track to strengthen for the quarter, up around 0.6% so far, recovering part of its 5.7% drop in the prior period.

Rupiah Set for Monthly Loss Despite Quarterly Gain

The New Zealand dollar remained at a three-month low around $0.564 and is on track for a monthly decline of more than 4%. The kiwi started September tough, partly as the Reserve Bank of New Zealand signaled a less hawkish rate outlook than markets had anticipated. It was further weighed down by a strengthening US dollar amid rising expectations for more Federal Reserve rate hikes. More recently, however, the spike in oil prices has increased upside risks to inflation, which prompted traders to ramp up bets on another rate hike in October. Governor Anna Breman also warned last week that persistently high oil prices could push near-term inflation above the central bank’s latest forecast. Meanwhile, data out today showed New Zealand’s business confidence weakened in September, dented by a surge in fuel prices.

The offshore yuan hovered around 6.70 per dollar on Wednesday as upbeat PMI data and fresh policy support strengthened confidence in China's economic outlook. Official data showed China's Composite PMI rose to 50.7 in September 2026, its highest level since December 2025, as both manufacturing (50.1 vs 49.8) and non-manufacturing (50.2 vs 49) returned to expansion territory. Meanwhile, a private survey showed the Composite PMI climbed to 52.1, with both manufacturing (52.1 vs 51.5) and services (51.6 vs 51.4) continuing to expand. The latest readings came as policymakers rolled out fresh stimulus measures, including mortgage subsidies and expanded central bank funding support, while the State Council also pledged "a package of practical and effective additional policies." Despite resilient exports and an AI-driven boost to industrial profits, China's economy remains under pressure from sluggish consumer spending, a prolonged property downturn, and weak business confidence.

Offshore Yuan Holds Gains

The Australian dollar fell below $0.70, hitting a nine-week low after August inflation figures undershot forecasts, trimming bets of near-term interest rate hikes. The monthly CPI rose 0.4%, below the expected 0.5%, while the annual pace accelerated to 4% from 3.5% in July but was below the 4.1% forecast. The trimmed-mean measure of core inflation rose 0.2% month-over-month, also under the 0.3% forecast. However, annual core inflation held at 3.6% for a third straight month and remained above the Reserve Bank’s 2–3% target band, a key factor behind the central bank’s decision to lift rates to a 15-year high of 4.60% on Tuesday. The marginal inflation miss still led markets to cut the odds of another hike in November to 20% from 36% before the data, while the next increase is now seen more likely in March rather than February. The Aussie is now on track for a roughly 2.8% monthly loss, as a stronger US dollar and ongoing Middle East tensions weighed on the risk-sensitive currency.

Australian Dollar Hits 9-Week Low

The Japanese yen strengthened past 157 per dollar on Wednesday and was on track to finish the month higher, as traders responded to a series of verbal warnings from officials signaling Tokyo’s determination to support the currency. Finance Minister Satsuki Katayama said Japan and the US would maintain close communication as they seek to preserve stability in currency markets amid rising concerns over the yen’s weakness. She also said President Donald Trump expressed concern about the yen during a meeting with Prime Minister Sanae Takaichi. Japan’s top currency official Atsushi Mimura also said this week that the prime minister and finance minister, along with the US, had delivered a “very clear” message regarding excessive currency depreciation. Still, the yen remained under pressure from wide US-Japan interest-rate differentials, as the Federal Reserve’s tightening outlook continued to outweigh the Bank of Japan’s rate hikes.

Yen Set for Monthly Advance

The dollar index traded around 101.4 on Wednesday and was on track to gain roughly 2% for the month, supported by concerns over persistent energy-driven inflation, a resilient US economy and hawkish signals from Federal Reserve officials that strengthened expectations for further rate hikes. Oil prices remain elevated as US-Iran negotiations remain deadlocked, although signs of improving energy flows from the Middle East have eased supply concerns. Meanwhile, Fed Governor Michael Barr reiterated his view that additional rate increases will likely be necessary to curb inflation, while New York Fed President John Williams said another rate hike “late this year” could be appropriate. Markets are currently pricing in nearly one percentage point of Fed rate increases over the next 12 months. Investors now await Wednesday’s PCE price index report, the Fed’s preferred inflation gauge, followed by Friday’s closely watched monthly jobs report for further guidance.

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