Here I will share my ideas on the forex market. My approach is based on fundamental analysis as the basis for trading ideas and technical analysis for their execution.
Overall we are neutral now, no much divergence between currencies. I have some Trade Ideas. As we have stagflation fears in US we have XAG and XAU going higher. So these are the best assets to trade now… But also we have weaker EUR ( but i dont know if that weakness will continue ) Next week we have NFP and PMI data around most of currencies but most important will be NFP. Im personally thinking that CAD should be weaker then it is…
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Markets adopted a cautious tone again today, as attention swung back to U.S. economic data. Today’s ADP private payrolls and ISM services figures are seen as key precursors to tomorrow’s highly anticipated nonfarm payrolls. The numbers are expected to sharpen the Fed’s rate-cut calculus, with traders reluctant to take large positions before the release.
Fed officials have broadly indicated openness to a rate cut this month, reinforcing expectations of a 25-basis-point move. Fed fund futures now price the odds of such a cut above 97%, reflecting the market’s conviction that easing is imminent.
The debate, however, is less about September and more about what comes afterward. Even Fed Governor Christopher Waller, a known dove, refrained from endorsing consecutive cuts. While he expects multiple moves over the next three to six months, he stressed that there is no fixed schedule, leaving policymakers room to adapt to incoming data.
On the other end of the spectrum, Atlanta Fed President Raphael Bostic reiterated his preference for a single cut this year, arguing that inflation risks remain the dominant concern. The divide highlights how much weight upcoming data, including Friday’s NFP, will carry in shaping expectations for the policy path into year-end.
Trade risks are also back in focus. US President Donald Trump asked the Supreme Court to fast-track his appeal against lower court rulings that deemed most of his global tariffs illegal. The appeals court ruled last week that Trump overstepped his authority when imposing sweeping levies on nearly all U.S. trading partners.
Trump is pushing for arguments to be heard in November with a decision soon after, warning that a delay until June 2026 could see as much as USD 750 billion to USD 1 trillion in tariffs collected and then potentially unwound—an outcome he says would cause major disruption. Normally, the Supreme Court would not deliver a decision until next summer.
Separately, Japan’s top trade negotiator Ryosei Akazawa departed for Washington for ministerial-level talks, signaling progress in implementing the bilateral trade deal reached in July. “Both Japan and the U.S. have agreed to implement the agreement faithfully and swiftly,” Akazawa said before leaving Tokyo.
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The foreign exchange market remains largely range-bound as traders await today’s U.S. non-farm payrolls report. Recent labor indicators, including ISM employment components, point to downside risk for NFP. Both manufacturing and services sub-indexes remain in contractionary territory, while ADP payrolls growth slowed sharply in August. This suggests a soft report is more likely than not.
Besides, the implications for Dollar are asymmetric. A weak payrolls print—particularly a sizeable miss—could spark a sustained wave of Dollar selling as traders price in more aggressive Fed action, including the possibility of back-to-back cuts. By contrast, a stronger report may only limit the pace of easing rather than shift the direction, implying any lift for the dollar would be temporary.
Canada’s employment report is also in focus, with markets watching closely to see if the data justify expectations that BoC could resume rate cuts this month.
On trade, US President Donald Trump signed an executive order Thursday to finalize the July agreement with Japan, imposing a 15% baseline tariff on most Japanese imports, including autos. The confirmation removes a significant uncertainty for the BoJ, which can now reassess the scope for further rate hikes later this year.
Trump also signaled fresh pressure on the tech sector, warning that “fairly substantial” tariffs are coming on semiconductor imports from firms that refuse to relocate production to the U.S. Companies with domestic expansion plans, such as Apple, would be spared.
For the week so far, Dollar remains the best performer. Aussie and Euro follow, while Yen lags as the weakest major. Kiwi and Swiss Franc also underperform, while Sterling and Loonie sit mid-table.
Dollar tumbled sharply in early New York trading Friday after much weaker-than-expected non-farm payrolls report. 10-year Treasury yield plunging through the 4.1% level while Gold also surged to fresh record high.
Traders moved swiftly to reprice Fed expectations, with a 25bps cut this month fully baked in and fresh speculation that policymakers may opt for a larger 50bps move. Looking ahead, odds of another 25bps cut in October spiked above 75%, underscoring market conviction that the central bank will need to move aggressively to shield the labor market.
That places next week’s CPI report in sharp focus. Should inflation show further signs of easing, it would open the door for the Fed to accelerate its easing cycle.
In weekly performance terms, Canadian Dollar is faring worst after its own dismal jobs data, while Yen remains under pressure but may recover some ground. Dollar is sliding toward the bottom of the performance table, likely to surpass Yen before the week closes. Euro leads gains, followed by the Aussie and Sterling, with Swiss Franc and Kiwi holding mid-pack.
CLEAR USD AND CAD WEAKNESS SO EVERYONE KNOW WHAT WE SHOULD DO
BANK REPORTS
Crédit Agricole warns that the 8 September French confidence vote is a pivotal event for the euro, with high odds of scenarios that could amplify political and fiscal uncertainty. Their analysis suggests EUR/USD risks are tilted lower, and markets may not be pricing in the full extent of potential volatility.
BofA sees the USD still modestly overvalued, but the drivers of further weakness are shifting away from valuation and more toward structural issues—stagflationary risks, Fed policy easing, and institutional credibility. The medium-term picture still points to gradual USD depreciation across G10.
Market Recap
- U.S. Dollar plunged after a much weaker-than-expected non-farm payrolls report (22k vs. 78k expected), with the unemployment rate rising to 4.3%, a near 4-year high.
- 10-year Treasury yield fell below 4.1%, reflecting aggressive repricing of Fed policy expectations.
- Gold surged to record highs on safe-haven demand and collapsing real yields.
Fed Expectations
- September FOMC: 25bps cut is fully priced, with speculation of a possible 50bps cut if CPI next week is soft.
- October FOMC: Odds of another 25bps cut jumped above 75%, signaling belief that the Fed needs to act aggressively.
- Markets expect accelerated easing cycle, shifting narrative from “soft landing” to “insurance required.”
Currency Performance
- Dollar sliding toward the bottom of the weekly performance table; likely to end the week among the weakest.
- Canadian Dollar underperforms most after disappointing domestic jobs data.
- Euro leads gains, followed by Aussie and Sterling; Swiss Franc and Kiwi mid-pack.
- Yen remains weak but may recover slightly on risk sentiment.
Other Key Points
- Gold thrives, supported by falling yields and USD weakness, and is approaching the $4,000 psychological mark.
- Global equities mixed: Initial optimism from easing hopes faded as growth concerns dominated.
- French political risk (Sept 8 confidence vote) flagged by Crédit Agricole as a potential EUR volatility driver.
- BofA notes USD is still modestly overvalued, but the weakness is now driven by structural concerns and policy shifts.
Im looking for AUD / GBP / EUR longs and USD / CAD shorts next week
I think America is losing it on its immigration policy.
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Yeah, most likely. But for us… ahah we dont care too much… We have our bias, employment forced rate cuts not good for USD and correlated CAD. Lets see US CPI this week, i dont think strong CPI will change USD downside… it only can add stagflation fears.
The big market mover from the weekend was the resignation of Japanese Prime Minister Ishiba, who stepped down under heavy pressure from his party after a historic election defeat. Ishiba, who came to power in October 2024, saw his coalition lose its majorities in both the lower and upper houses of parliament.
On the data front, revised GDP showed the economy expanding at a stronger-than-expected 2.2% annualised pace in Q2 (0.5% q/q), up from the 1.0% preliminary estimate. The upgrade reflected firmer private consumption and marked a fifth consecutive quarter of growth.
From China, August trade data revealed exports rising but missing expectations, with year-on-year growth the slowest since February. Shipments to the U.S. plunged 33% y/y, underscoring the drag from tariffs.