Donald Trump's re-election on November 5 has revived USD strength, as his plans for fiscal stimulus and new trade tariffs in 2025 are expected to boost the US outlook while pressuring key trading partners. Markets are drawing parallels to 2018 when similar policies drove the USD up nearly 10%. However, unlike 2018’s rate hikes amid strong growth, 2025 is expected to see slower growth and further Fed cuts, with potential stagflation risks complicating the Fed’s easing cycle. Next week, the focus will be on PMIs and consumer sentiment data. With much of the Trump optimism priced in, the USD may be vulnerable to disappointing data or dovish Fed signals.

For the first time since early 2020, USD/CAD has surged past the key psychological level of 1.40, driven by a broad-based post-US election rally in the dollar. Despite this, the CAD has held up better than other G10 currencies, likely because Canada is less exposed to potential US tariffs and could benefit from any US fiscal stimulus due to its close economic ties. The latest Canadian jobs report was mixed, with steady unemployment but weak participation, offset by a surprising rise in wage growth. The focus now shifts to Tuesday’s CPI data for October; if inflation fails to rebound, it could challenge the central bank’s outlook and prompt further easing.

Expected weekly trading range: 1.389 - 1.431

Euro is under pressure as markets anticipate renewed policy divergence between the Eurozone and the US, fueled by Trump's re-election, potential US tariffs on the EU, and a reduced US role in Ukraine. While rates markets have priced in a significant gap between the Fed and ECB, economists see this divergence as overstated and believe the pair is undervalued considering sovereign credit risks and equity performance. The recent selloff also appears excessive relative to shifts in the real rate spread. Next week’s focus will be on Eurozone PMIs, Q3 wage data, and a slate of ECB speeches.

Expected weekly trading range: 1.468 - 1.512

Despite a post-election slump, the British pound has held up better against the surging US dollar than other major currencies like the euro, Swiss franc, and yen. This resilience is largely due to the UK's relative rate advantage, supported by strong economic data and a less dovish Bank of England stance. Going forward, broad USD movements will likely drive the pound, but the UK's rate appeal could help it outperform other G10 currencies. Key data next week, including November PMIs and October CPI, will be crucial in shaping market expectations for potential BoE rate cuts.

Expected weekly trading range: 1.753 - 1.807

Japan's Prime Minister Shigeru Ishiba remains in power with a fragile LDP-Komeito coalition, facing bill-by-bill negotiations. This political uncertainty, coupled with a reliance on Abenomics, weighs on the yen. The JPY is also pressured by higher US Treasury yields and Trump trades. With USD/JPY breaking past 155, markets eye 158-160 levels where past BoJ interventions occurred. The risk of actual FX intervention is rising, with Finance Minister Katsunobu Kato increasing verbal warnings. Upcoming speeches by BoJ Governor Kazuo Ueda and nationwide inflation data will be key as markets assess the likelihood of a December rate hike.

Expected weekly trading range: 107.80 - 111.10

The Swiss franc remains stable, avoiding the volatility seen in other currencies like EUR/USD and USD/CAD. While it’s gained slightly against the euro amid Europe’s risk-off sentiment, franc remains in a tight range below 0.94. Options markets reflect this calm, with lower volatilities and steady risk reversals. Heading into year-end, the focus shifts to Q3 data confirming Swiss economic resilience, October trade figures, and potential insights from new SNB board member Petra Tschudin.

Expected weekly trading range: 0.621 - 0.639

The Chinese yuan recently rebounded to around 7.23, recovering from a 3-month low, thanks to stronger-than-expected midpoint guidance from Chinese authorities, signalling their concern over the currency's rapid depreciation. However, economic indicators remain mixed. In October, Chinese banks issued just CNY 500 billion in new loans, a sharp drop from September and below forecasts, indicating weak demand for corporate financing. At the same time, inflation slowed to 0.3% year-over-year, its lowest since June, while producer prices continued their deflationary trend, falling by 2.9%. These factors are likely to weigh on the PBoC's upcoming policy decisions.

Expected weekly trading range: 5.06 - 5.22

The Indian rupee has hit a record low against the US dollar, driven by a strong dollar outlook following Trump's re-election. Despite interventions by the Reserve Bank of India (RBI), the rupee continued to weaken due to foreign investor outflows from Indian equities. Adding to the pressure, domestic inflation surged to 6.2% in October, breaching the RBI’s target range and pushing back expectations for rate cuts. The rupee’s performance will be closely monitored as the RBI faces economic challenges and considers potential policy adjustments.

Expected weekly trading range: 59.05 - 60.85

The Australian dollar remains pressured by Trump trade as investors grow concerned over Trump's cabinet picks and their tough stance on China. This has heightened correlations between the AUD and CNY, with traders using the AUD as a proxy to short the yuan. However, the AUD is somewhat supported by recent labour market data suggesting the RBA is not in a hurry to cut rates. In the coming week, the RBA Minutes and public statements by Governor Bullock and Assistant Governor Kent are expected to reaffirm the central bank’s cautious stance on rate cuts.

Expected weekly trading range: 0.896 - 0.924

The New Zealand dollar has also been impacted by the Trump trade, particularly due to concerns over global trade policies targeting China. However, domestic factors have provided some support; recent inflation expectations data edged higher, and stable labour market conditions with unemployment below the RBNZ’s 5% forecast have lessened the likelihood of a steep 75bp rate cut in late November. A 50bp cut remains more likely. Any adjustments in rate expectations may offer limited support for the NZD going forward.

Expected weekly trading range: 0.818 - 0.842

The Mexican peso has dropped past 20.50, its lowest level since July 2022, amid concerns over potential protectionist policies from the US following Trump's re-election. Fears of stricter trade measures have weighed on the peso, alongside speculation that Mexico’s central bank may cut interest rates at its next policy meeting, potentially diminishing the currency’s attractiveness to foreign investors. Despite modest gains in industrial production and increased consumer confidence, these concerns continue to pressure the peso.

Expected weekly trading range: 14.26 - 14.70