ECB officials signaled that interest rates are likely to stay put unless major economic shocks emerge, with Isabel Schnabel saying current policy is well-positioned and inflation near target. Martin Kocher noted that Trump-era trade tensions hurt Europe less than feared, though long-term forecasts—especially for 2028—remain highly uncertain. Some economists argued that political turmoil in the U.S. could weaken the dollar’s dominance, offering Europe a chance to strengthen the euro’s global role through deeper financial integration and a true eurobond market. Banks remain broadly bullish on EURUSD, generally targeting around 1.20 by end-2025 and 1.22–1.24 in 2026, depending on monetary policy, U.S. growth, and geopolitics. Meanwhile, Eurozone industrial production for September is expected to rebound sharply, signaling tentative stabilization in manufacturing, though vulnerabilities from external risks and tight financing remain.

Japan’s finance minister again warned about yen weakness as USDJPY tested 155, though traders doubt near-term intervention since Japan hasn’t acted since the pair hit 160 in July 2024. Markets see PM Takaichi’s “Abenomics 2” approach—looser fiscal rules, reflation-leaning appointments, and a potential ¥15–20 trillion stimulus— as signaling prolonged easy conditions and a weaker yen, even as she maintains a balanced stance on monetary policy and avoids pressuring the BOJ. Investors expect only a single BOJ rate hike in December or January, meaning yen strength would likely depend more on future Fed cuts than Japanese policy. Recent data showed machine tool orders surging on strong foreign demand and PPI staying firm, underscoring ongoing inflation pressures that keep the BOJ on a slow normalization path.

Australia’s latest data—rising consumer confidence, stronger business sentiment, robust home-loan growth, and better-than-expected employment figures—suggests a firm economic backdrop that makes near-term RBA rate cuts unlikely. Officials, including Deputy Governor Hauser, highlight limited spare capacity and the need for productivity gains to avoid inflation pressures, reinforcing the RBA’s cautious stance. Additionally, improved budget conditions and potentially lower government bond issuance support a stronger outlook for the Australian dollar.