ANZ Research previews next week's October FOMC meeting.

"The bigger event risk is the FOMC meeting. We see two broad scenarios:

"Hawkish hold: Rates are left unchanged, but Chair Warsh emphasises that inflation remains too high and a rate hike in December is live. OIS is largely reflecting this outcome (20bp priced) so it would be unlikely to shift the DXY meaningfully. Any dissents will indicate how hawkish the FOMC is tilting," ANZ notes.

25bp hike: The Fed responds to recent firm inflation data with a rate rise. Because markets are pricing this as only a modest probability (6%), the USD would likely rally sharply as investors adjust expectations for the timing of further hikes. However, we do not expect such a rally would last. With OIS reflecting a total of two or three hikes to September 2027, it is difficult to see much room for additional hikes to be priced in," ANZ adds.