Synopsis

Nomura’s analysis of the IMF’s latest COFER data highlights a further decline in the USD’s share of global FX reserves to 56.3%, but argues this is largely a valuation effect rather than genuine diversification away from the dollar. When adjusted for FX moves, reserve managers actually added USD holdings. Meanwhile, flows into EUR and AUD and out of GBP and CAD align with some of Nomura’s tactical trade views.

Key Points

• Headline shifts: USD share in FX reserves fell ~1.5ppt to 56.3%; EUR’s share jumped to 21.1% (+1.1ppt).

• Valuation effect: EUR’s ~9% rise against the USD in Q2 2025 explains nearly all of its reserves share increase. Adjusting for FX, reserve managers still bought significant amounts of USD.

• Other currencies: Reserves managers added EUR and AUD, while selling GBP and CAD.

• Trade implications: Nomura notes this behaviour mirrors their tactical positioning—long AUD/CAD since late July, and long EUR/GBP on three occasions this year (March, June, September).

• Value trap risk: The USD’s falling share appears misleading—reserves managers are not abandoning the dollar, but its valuation makes it look weaker in the data.

Conclusion

Nomura argues the IMF COFER data should not be over-interpreted as evidence of structural de-dollarization. Instead, the apparent USD share decline is a “value trap” caused by FX valuation effects. The underlying flows still favour the dollar, though reserve managers have also diversified modestly into EUR and AUD.

• AUD$ +0.17% at 0.6608 in NY Afternoon; Friday NorAm range 0.6614-0.6600

• Full Friday range 0.6614-0.6590 highlighting frozen market amid US govt shutdown

• List of delayed US data grows; Friday's widely anticipated payroll data added to list

• Not seen in AUD$ but USD slid slightly after US ISM data hinted at soft US economy

• Commods throwing support for AUD$, copper +3.1%, silver +2%, oil +1.1%

• AUD$ res 0.6629 Oct 1 high, 0.6685 the upper 30-d Bolli, 0.6707 2025 high Sept 17

• Supt 0.6577 daily low Oct 2, 0.6561- 50% Fib of 0.6415-0.6707, 0.6546 the 55-DMA
AUD Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own.)

Synopsis

ANZ expects the RBNZ to deliver a 25bp rate cut next week, with the tone leaving open the possibility of further easing. They see scope for a tactical NZD rebound even on a cut, but caution that the AUD/NZD rally towards 1.20 lacks the fundamental backing seen in 2022. Near term, ANZ prefers a moderate AUD/NZD upside bias toward 1.15 but advises against chasing higher levels.

Key Points

• Policy call: ANZ expects the RBNZ to cut 25bp to 2.75%, while keeping dovish messaging. They see only a 35% chance of a 50bp cut, which would generate more immediate NZD downside.

• NZD reaction function: Historical patterns suggest NZD/USD could rebound ~1% even after a 25bp cut, as markets are already priced. A 50bp cut, however, could trigger a 1% decline in NZD/USD, fueling AUD/NZD upside.

• AUD/NZD dynamics:

  • Near term: Upside to 1.15 still plausible as AU inflation remains sticky and NZ growth weaker.

  • Medium term: Divergence is less stark than in 2022, when inflation and activity surprises clearly drove the cross higher.

  • Long term: As NZ cuts filter through and AU-NZ conditions normalize into 2026, scope for AUD/NZD sustainably breaking 1.20 looks limited.

• NZD/USD outlook: ANZ holds a slightly positive near-term bias, with risk sentiment and USD developments likely dominating direction outside of the RBNZ decision.

Conclusion

ANZ sees the RBNZ opting for a measured 25bp cut, balancing downside risks with market expectations. This could allow for a short-lived NZD rebound and keep AUD/NZD capped below 1.20. Strategically, ANZ stays cautious on chasing AUD/NZD higher, preferring selective NZD longs once rate divergence stabilizes.

• Cable rises to 1.3476 as USD weakens on sub-f/c U.S. Sept ISM services index

• 50.0 vs 51.7 expected. 1.3476 = intra-day high (1.3467 was Ldn am high)

• ISM services miss underpins expectation of Fed rate cuts on Oct 29, Dec 10

• UK final September services PMI revised down to five-month low of 50.8

• GBP/USD resistance levels include 1.3500 and 1.3526 (Wednesday's high)

• BoE Governor Bailey warns against rolling back financial regulation

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

Synopsis

Goldman Sachs expects the Reserve Bank of New Zealand (RBNZ) to accelerate its easing cycle with a 50bp rate cut at the October policy meeting, reflecting deepening signs of economic stress. With GDP contracting, unemployment climbing, and inflation back within target, the bank sees scope for faster accommodation before leadership changes in December.

Key Points

• Economic backdrop:
  NZ GDP contracted at a 4% annualized rate in Q2 2025, marking the third contraction in five quarters. The decline was concentrated in rate-sensitive sectors, underscoring the drag from restrictive monetary policy.

• Housing and labor market stress:
  House prices continue to fall, while the unemployment rate is now more than 100bp above NAIRU, signaling slack in the labor market.

• Inflation dynamics:
  Core inflation has moved back within the RBNZ’s 1–3% target band, reducing the urgency for tighter policy.

• Policy signals:
  At the August meeting, two of six MPC members already voted for a 50bp cut—before the GDP contraction was published. This strengthens the case for more aggressive easing now.

• Forward guidance:
  GS forecasts another 25bp cut in November, bringing the OCR to a 2.25% terminal rate ahead of Dr Anna Breman’s start as RBNZ Governor on 1 December.

• Relative stance vs markets:
  Goldman’s baseline is more dovish than current market pricing, which still underestimates the depth of cuts required.

Conclusion

Goldman Sachs expects the RBNZ to front-load easing with a 50bp cut in October, followed by an additional 25bp in November. With growth faltering, unemployment rising, and inflation contained, monetary policy will likely shift decisively toward accommodation. For markets, this sets up further NZD downside risks in the near term.

Synopsis

Credit Agricole examines whether EUR/USD’s recent strength has been powered by broad-based EUR demand or just USD weakness. Using BIS NEER indices, they conclude that EUR buying has been the key driver, though investor feedback suggests the rally may lack fundamental depth and could fade.

Key Points

• Broad EUR Buying:
  The EUR BIS NEER index hit its highest level since 2014, and the ECB’s EUR NEER 41 gauge reached an all-time high in September. This indicates strong, broad-based EUR demand, not just a bilateral move vs. USD.

• USD Consolidation:
  The USD NEER has consolidated near three-year lows, showing that while USD weakness has contributed, the primary driver has been direct EUR inflows.

• Investor Feedback:
  Discussions with FX investors suggest skepticism about the sustainability of EUR gains. They see the rally increasingly lacking fundamental support, raising risks of fading momentum.

• Implications for EUR/USD:
  While the pair’s outperformance reflects genuine EUR strength, the lack of deeper macro fundamentals behind the rally means gains could be vulnerable if sentiment shifts or growth divergences re-emerge.

Conclusion

Credit Agricole finds that EUR/USD’s climb has been driven by EUR buying across the board, not just USD weakness. However, they caution that this rally may be losing steam, with positioning and sentiment stretched, raising the risk of a pullback.

• USD slips into NorAm, $IDX -0.12%; EUR +0.23%, JPY flat, GBP +0.08%

• Scheduled US payroll data postponed due to shutdown, stox up in pre-mkt trading

• UST yields slightly lower; USD alternatives gold, bitcoin & ETH near trend highs

• Fragile dollar remains under a cloud as shutdown weighs

• EUR/USD firms amid risk rally though momentum limited

• EUR/USD option calendar stacked with more huge strikes

• GBP/USD maintains 1.34 handle before BoE chief speaks

• USD/JPY rebounds, Ueda cautious, LDP election draws nearer

Majors Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

• Cable has traded a 37 pip range since the London open; 1.3430-1.3467

• 1.3467 approximates to Wednesday's NY session low (after jump to 1.3526)

• Thursday low was 1.3402. BoE's Bailey due to speak in Amsterdam at 1320 GMT

• Bailey is also due to speak in Edinburgh on Monday. U.S. payroll data on ice

• Senate to vote on dueling plans to end U.S. shutdown; neither likely to pass

• UK Sept services PMI downwardly revised to 50.8, from 51.9 flash estimate

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

(Fixed typo in headline)

• USD/JPY rebounds from bear trap, held above key 146.55 Fibo support this week

• Up on Friday from 147.10 to 147.82, on the EBS, before settling into a range

• The yen trims weekly advance as investors weigh BOJ, election impacts

• BOJ's Ueda warns of global uncertainty, keeps markets guessing on next hike

• Overnight options (Monday expiry) now capture Japan's LDP leadership election

• 146.55 Fibo, is a 76.4% retrace of the 145.50 to 149.96 September EBS rise

• Note 2025 may disrupt the euro's positive October trend against the yen

Hourly Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Huge 0.6600 option expiry for the NY cut helps to anchor AUD/USD

• The size of the strike for 10am Eastern Time is A$2.1 billion

• 0.6600 approximates to mid-point of Thursday's 0.6577-0.6624 range

• Trump eyes cuts to "Democrat Agencies" in U.S. government shutdown

• U.S. ISM September services index due at 1400 GMT; 51.7 forecast

• ANZ now forecasts RBA rate hold next month (Nov 4), as do CBA and NAB

AUDUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Cable has traded a quarter-cent range thus far Friday; 1.3430-1.3455

• 1.3455 is high since Thursday's drop to threaten 1.3401 (Monday's low)

• Thursday's drop was fuelled by dollar gains on U.S. data substitutes

• 1.3507 was Thursday's Ldn am high (1.3526 was Wednesday's one-week peak)

• Trump eyes cuts to "Democrat Agencies" in U.S. government shutdown

• UK September final services PMI index due at 0830 GMT; 51.9 forecast

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/SGD crosses 1.2900 psych barrier to reach 1.2902 peak

• Tentatively enters Bollinger uptrend channel at 1.2899

• Pulled higher by USD/JPY rally following its 100 DMA bounce

• Further gains likely on Fri close above 23.6% Fibo 1.2929

• USD generally bid in Asia even with stocks risk-on; STI +0.3%

• Markets eye Asia c.bank meetings ahead - MAS due this month
SGD:

(Ewen Chew is a Reuters market analyst. The views expressed are his own.)

• Steady at the base of a 1.3439-1.3455 range with modest flow on FX Matching

• There is no significant UK data, so the U.S. dollar will likely lead GBP

• BoE Gov Bailey will speak about macro-financial stability in Amsterdam

• UK firms' hiring plans are the joint weakest since 2020, BoE survey shows

• Charts - neutral 5, 10 and 21 DMAs, with horizontal 21-day Bollinger bands

• Daily momentum studies flat-line - daily signals show no significant bias

• 1.3356 lower 21-day Bolli band, then last week's 1.3324 low first support

• 1.3505 tested 21-DMA and 1.3653 upper 21-day Bolli are initial resistance

• A close above the 1.3506 21 DMA would be positive for next week
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Shares of E79 Gold Mines rise as much as 34.6% to A$0.035, a peak since their May 2

• Stock logs biggest intraday pct gain since June 20

• Stock headed for third straight weekly gain

• Mineral explorer announces acquisition of Cue Metals Pty Ltd, which owns Cue Gold Project, Western Australia

• Says the project is considered prospective for high-grade quartz reef-hosted gold deposits

• Adds it accepted commitments for A$3 million ($1.98 million) placement at an issue price of A$0.021

• About 8 mln shares change hands, 13 times the 30-day avg

• Stock last up 23.1% and up 47.6% YTD

($1 = 1.5156 Australian dollars)

(Reporting by Anjali Singh in Bengaluru)

• AUD/USD flat Fri in quiet trading, USD resilient despite rising uncertainty

• DXY +0.4% from Thur 97.52 low, U.S. government shutdown impact negligible

• Fed President Logan reluctant to cut FFR further due to inflation risks

• AUD's bounce from 0.6545 55-DMA zone faltering, needs USD weakness to extend

• S&P AU Sep global composite PMI 52.4 (prior 52.1); consumer sentiment Oct 7

• List of U.S. data due Fri impacted by shutdown includes NFP & unemployment

• Range Asia 0.6596-0.6604, support 0.6415 0.6373, resistance 0.6707 0.69435
AUD Daily 55-DMA


DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• +0.05% after closing -0.3%, with the USD up 0.2%, despite lower UST yields

• UK firms' hiring plans are joint weakest since 2020, BoE survey shows

• UK, EU food trade deal could be implemented within a year - EU trade chief

• BoE Gov Bailey will speak about macro-financial stability in Amsterdam

• Charts - neutral 5, 10 and 21 DMAs, with horizontal 21-day Bollinger bands

• Daily momentum studies flat-line - daily signals show no significant bias

• 1.3356 lower 21-day Bolli band, then last week's 1.3324 low first support

• 1.3505 tested 21 DMA and 1.3653 upper 21-day Bolli are initial resistance

• A close above the 1.3506 21 DMA would be a modest positive signal
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Trades up 0.05% after closing down 0.15% with the U.S. dollar +0.2%

• Europe must fight tax fraud gangs, corruption, EU chief prosecutor says

• Italy says deficit to respect EU's 3% ceiling this year, despite weak growth

• Charts - 21-day Bollinger bands contract, mixed 5, 10 and 21 DMAs

• Neutral daily momentum studies - daily signals show no significant bias

• This week's 1.1778 high, then last week's 1.1820 high, are first resistance

• 1.1655, 0.5% of the Aug-Sep rise, then 1.1593, 0.618% are initial supports

• Fading the 1.1653/1.1840 21-day Bolli bands with tight stops provides value

• 1.1700 2.279 BLN, and 1.1800 1.676 BLN are the nearest large Oct 3rd strikes
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.4% from Thur 0.6624 high with USD in a tenuous recovery mode

• Fed President Logan reluctant to cut FFR further due to inflation risks

• DXY +0.2% Thur as the initial U.S. government shutdown negativity dissipates

• S&P AU Sep Global Composite PMI due Fri (prior 52.1), consumer sentiment Tue

• AUD's rally from 0.6544 55-DMA zone starting to falter, needs USD assist

• List of U.S. data due Fri impacted by shutdown includes NFP & unemployment

• Overnight range 0.6577-0.6624, support 0.6415 0.6373, resistance 0.6707
DXY Daily 55-DMA


AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Synopsis

BofA argues that the Swiss National Bank (SNB) faces structural constraints that limit its ability to weaken the Swiss franc (CHF). With markets unwilling to price a return to deep negative rates, the SNB has fewer tools available. Interventions have repeatedly failed, and the persistence of CHF strength suggests that only a fundamental shift in the policy framework could change the currency’s trajectory.

Key Points

• Rate Differential Floor:
  Markets see negative rates as carrying more costs than benefits, effectively placing a floor on how far Swiss rates can diverge from peers. This limits the downside pressure on CHF from monetary policy.

• Carry Trade Dynamics:
  As global policy converges, carry costs for holding CHF positions are likely to become less punitive, further supporting the currency.

• Gold and Term Premium Correlation:
  CHF remains strongly correlated with term premium and gold prices, reducing the effectiveness of interest rate policy as a weakening tool.

• Policy Transparency:
  BofA welcomes the SNB’s shift toward greater transparency in decision-making, moving away from its opaque quarterly cycle. This could improve market understanding of its reaction function.

• FX Interventions Ineffective:
  The SNB’s history of currency interventions has failed to produce a trend depreciation of CHF. Repeated rounds of ZIRP have not reduced its overvaluation.

• Need for Policy Shift:
  BofA argues that the SNB should transition to a more explicit and symmetric FX policy, especially given new export headwinds from tariffs and ongoing hedging demand.

Conclusion

BofA’s stance is that the SNB cannot win its current fight against CHF strength using traditional tools. With negative rates politically and economically costly, and interventions ineffective, CHF is likely to remain resilient. A more radical policy overhaul—anchored in a transparent and symmetric FX framework—may be the only viable long-term solution.

The dollar rebounded on Thursday as the market adjusted to the dearth of U.S. economic data on offer following the government shutdown. The only U.S. economic numbers available came from Challenger, Gray & Christmas, who said that planned job cuts dropped 37% month-on-month to 54,064 in September.

That appeared to help the dollar -- coming a day after the ADP report showed an unexpected drop in private sector jobs -- though employers have so far this year announced 946,426 job cuts, according to Challenger, the highest year-to-date since 2020. Previously scheduled data on jobless claims and factory orders were not released due to the shutdown.

The data drought leaves market participants wondering how heavily to weigh privately released reports, especially since Friday's U.S. nonfarm payrolls report -- usually the biggest release of the monthly economic calendar -- will also not take place under the shutdown.

Federal Reserve Bank of Dallas President Lorie Logan said the U.S. central bank appropriately cut rates last month to guard against the risk of a sharp deterioration in the job market, but said that so far the cooling is gradual and signaled she is not eager to cut rates further. U.S. Treasury Secretary Bessent said the first round of Federal Reserve chairman interviews will be completed next week and that he will present President Donald Trump with three to five strong candidates. EUR/USD fell to a four-session low and techs are looking bearish. A doji on the daily USD/JPY candlesticks showed the market's trepidation ahead of comments from BOJ Governor Kazuo Ueda. GBP/USD broke a series of higher lows and was heading for a possible bearish crossover. Falling daily and monthly RSIs were among the bearish leaning AUD/USD technicals. A Bank of England survey indicated that British businesses have the weakest hiring intentions since 2020 and expect the fastest consumer price inflation since early 2024, highlighting the challenges facing the central bank.

The S&P 500 was trading 0.14% firmer in New York afternoon after hitting a record intraday high earlier. WTI crude oil fell 2.04%, extending a run of declines into a fourth day due to concerns about oversupply in the market ahead of a meeting of the OPEC+ group over the weekend.

Copper rallied 1.24% as worries about shortages due to supply disruptions outweighed weak demand prospects in leading consumer China.

Gold fell 0.38%.

Heading toward the close: EUR/USD -0.04%, USD/JPY +0.05%, GBP/USD -0.21%, AUD/USD -0.21%, DXY +0.12%, EUR/JPY +0.02%, GBP/JPY -0.16%, AUD/JPY -0.15%.(Burton Frierson)

Synopsis

MUFG maintains a bullish bias on the Japanese yen, expecting USD/JPY to strengthen to 144 by year-end. They see increasing likelihood of a BoJ rate hike in October, supported by political stability and Fed easing, which should drive yen appreciation.

Key Points

• BoJ Hike Pricing:

  • Market pricing for a 25bp BoJ hike on 30 October has risen to 16bps, not yet fully priced.

  • BoJ July minutes revealed growing support for a hike; board members Tamura, Takata, and Noguchi are in favor.

  • Upcoming speeches (Dep Gov Uchida on Oct 2, Gov Ueda on Oct 3) and the Q3 Tankan survey will be key signals.

• Political Backdrop:

  • A Koizumi victory in Japan’s leadership race is expected to bring greater political stability, strengthening the case for policy normalization.

• Market Dynamics:

  • Yen weakened more than MUFG expected in September but quickly reversed after nearing 150.00, suggesting limited downside.

  • Fed rate cuts, combined with a BoJ hike and improved Japanese political stability, should support yen strength.

• Forecast & Risks:

  • MUFG targets USD/JPY at 144 by year-end.

  • Risks skew to the upside for the yen if BoJ policy tightening and Fed easing both materialize more aggressively than expected.

Conclusion

MUFG expects yen strength into year-end, underpinned by a likely October BoJ rate hike, Fed easing, and enhanced political stability under Koizumi. They see USD/JPY falling to 144 by December, with risks that the yen could outperform even further.

• NY opened near 1.1755 after EUR/USD rallied overnight on soft US yields, US$

• EUR/USD fell in NY as yields firmed & US$ buyers emerged

• Drops in gold , equities & USD/CNH gains reinforced US$ buying

• EUR/USD neared the 55-DMA, hit 1.1683 then bounced slightly, was down -0.18% late

• Techs lean bearish; RSIs are falling, EUR/USD traded below the 10- & 21-DMAs

• US Sep. ISM non-mfg PMI is a risk Friday, employment component to be in focus
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Synopsis

Credit Agricole’s analysis of the IMF’s latest COFER data shows that while the reported USD share in global FX reserves fell to its lowest level since 1995, underlying “real demand” for USD holdings remained stable when adjusted for currency moves. The EUR’s reported share increased but was flat in real terms, while GBP, AUD, JPY, CHF, and CAD all lost share in real terms despite nominal gains.

Key Points

• USD Share Decline:

  • The USD share fell to 56.3% in Q3 2024 from 57.79% in Q1 2025.

  • Despite this drop, Credit Agricole’s “real demand” gauge (adjusting for USD depreciation) suggests central banks maintained stable demand for USD.

• EUR Dynamics:

  • Reported EUR share rose to 21.13%, the highest since 2014.

  • Adjusted for EUR/USD appreciation, the share was stable in real terms.

• GBP & AUD:

  • GBP’s reported share rose to 4.83% and AUD’s to 2.09%.

  • Both currencies appreciated vs. the USD, meaning their real shares declined.

• Other G10 Currencies:

  • JPY, CHF, and CAD all saw reported shares slip slightly.

  • Adjusted for relative outperformance vs USD, they suffered the largest real share declines among G10 currencies.

Conclusion

Despite headline figures showing a decline in the USD’s share of reserves, Credit Agricole argues that true demand for USD remains resilient when currency valuation effects are considered. The main losers in real terms were secondary G10 currencies, reinforcing the USD’s durability as the dominant reserve asset, while EUR gains are more optical than fundamental.

• Cable drops to threaten 1.3435 (Wednesday low) as U.S. data buoys dollar

• Revelio reportedly suggests U.S. economy added circa 60k jobs in September

• 50k was Reuters poll forecast for Friday's postponed September NFP number

• U.S. unemployment rate likely steady at 4.3% in September, Chicago Fed says

• U.S. layoffs fall in September. Pound hurt by weak 10-year gilt auction

• GBP/USD support points below 1.3435 include 1.3414 (Tuesday low) and 1.3400

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)