ECB Vice President Luis de Guindos and Board member Frank Elderson highlighted a more balanced outlook for eurozone growth, with inflation easing (especially in services), fewer downside risks due to easing trade tensions, a Middle East ceasefire, and potential boosts from rising military spending. Policymakers are pausing after eight quarter-point rate cuts, holding the deposit rate at 2% amid stable inflation near target and resilient growth despite U.S. tariffs. One major bank sees a positive macro environment and expects the ECB to keep rates steady until at least June 2026, while the Fed begins cuts, forecasting the euro to strengthen to $1.20 by Q4 2025 and $1.26 by Q3 2026. Key upcoming data includes Germany’s ZEW sentiment (Nov 11), Eurozone Sentix Investor Confidence (forecast -4.0 vs prior -5.4, signaling cautious recovery), Q3 GDP, employment, industrial production, and trade balance, which could lift the euro if upbeat.

Last week, the yen gained from a dollar sell-off. PM Sanae Takaichi’s shift to multi-year budgeting, reflationist appointments, and a potential ¥15–20 trillion stimulus have raised expectations of looser fiscal policy and prolonged BOJ accommodation, widening the U.S.-Japan yield gap and pressuring the yen. However, the BOJ’s October meeting summary and board member Junko Nakagawa’s speech today signaled readiness for a rate hike amid improving conditions, reduced uncertainty, and focus on wages and global risks—though a sustained yen rally likely needs aggressive Fed cuts beyond a one-off BOJ move. Key data this week: September current account, October bank lending, preliminary machine tool orders, and PPI.

The RBA’s hold at 3.6% with no cuts until mid-2026, alongside Australia’s stronger GDP outlook (1.8% in 2025, rising to 2.3% by 2027) versus the US, supports AUD appreciation, bolstered by a tight labor market, rising assets, and sustained commodity gains—despite vulnerability to AI-driven risk-off moves. With inflation above target until mid-2026, markets expect only mild RBA easing to 3.4% by late 2026 versus sharper Fed cuts to ~3%; positioning has improved as shorts unwind, with AUD ~8% undervalued (fair value 0.71 vs. ~0.65) and far below historical norms. Positive China signals—bottoming CPI and PBOC’s stable yuan policy—add support, favoring AUDUSD holding up unless risk aversion deepens. Key data this week: consumer and business confidence, home loans, and jobs.