What moved
The week belonged to one trade in two forms: out of the Australian dollar, into a haven. AUD/JPY and AUD/USD both fell more than one and a half percent, and nothing else came close.
| Pair | Monday to Monday |
|---|---|
| AUD/JPY | -1.57% |
| AUD/USD | -1.54% |
| CAD/JPY | -1.02% |
| NZD/JPY | -1.01% |
| USD/CAD | +1.00% |
| NZD/USD | -0.98% |
Behind that, the ladder of the eight majors against the basket. The Australian dollar has the highest policy rate of the eight at 4.35 percent, and it was still the worst of them, which is the sort of week where carry gets you nowhere.
| Currency | Against the basket |
|---|---|
| Japanese yen | +0.78% |
| US dollar | +0.76% |
| Euro | -0.07% |
| British pound | -0.11% |
| Swiss franc | -0.13% |
| New Zealand dollar | -0.22% |
| Canadian dollar | -0.24% |
| Australian dollar | -0.77% |
The pair that did nothing
USD/JPY finished the week at -0.02 percent. Not because nothing happened to it, but because both halves rose by almost the same amount, and a pair only shows the difference between its two legs. It is the clearest argument there is for looking at currencies first and pairs second: the dollar had a strong week, the yen had a strong week, and the pair everyone watches had none.
The same logic made AUD/JPY the biggest mover of all 28. The strongest currency of the week against the weakest, with no cancelling out in the middle.
Risk sentiment: up, then quietly out
Our risk sentiment score reads equities, volatility, credit and the commodities that track industrial demand, and it is the heaviest of the four things behind a currency score. It opened Monday at +14, climbed through that afternoon to +41 as oil extended its slide, flipped fully to risk on by Tuesday and reached +47 that evening. Then it went the other way: +38 on Wednesday morning, +26 on Thursday, +28 on Friday.
The part that did the damage came late. On Friday afternoon the credit component tightened noticeably, with high yield over five days moving from -0.68 percent to -1.05 percent, and that lands on the cyclical currencies first. So the week started cautious, turned confident, and drained away again, which is exactly the shape that hurts the Australian dollar most: it is the currency that needs confidence, and it went down while the two currencies people hide in went up.
The central banks
A quiet week for decisions and a loud one for speeches.
- The SNB held at 0 percent on Thursday, exactly as expected. The franc still lost 0.13 percent on the week, which is what a decision that surprises nobody is worth.
- The Fed sounded hawkish twice. Goolsbee in London on Monday and Barr on Wednesday, and by Wednesday evening the dollar and the ten-year yield were at multi-year highs.
- The Bank of England repeated itself. Bailey went over the hawkish energy message again in Oxford on Friday with no fresh escalation, and sterling slipped a place in our ladder rather than gaining one.
- The RBA was still being priced from the week before. Bullock's hawkish testimony was carrying the Australian dollar into Monday, when it was the strongest performer of the field. It ended the week the weakest of the eight, with the highest policy rate of the eight.
Geopolitics and the data
The one thing everybody was watching was the Trump and Xi summit on Thursday, and it produced no surprise. No breakthrough either. For currencies that is not nothing: the Australian dollar trades as the cleanest way to hold a view on China, and a summit that changes nothing leaves it where the rest of the week found it.
The other piece of geopolitics was closer to home for the yen. Japan repeated its intervention warning on Friday morning with the currency sliding towards 160, and then the finance minister spoke in the afternoon. More on that below.
On the data, Wednesday was the day that mattered: the flash PMIs came apart, with the eurozone surprising sharply higher while the UK and Australia missed. Thursday added a German Ifo that beat, Australian labour figures that came in mixed, and Canadian retail trade that confirmed the earlier estimate. Oil kept sliding all week, which the RBNZ had already flagged as a worry on Wednesday.
What we recommended, and how it went
The four setups and what they came to are in the table at the top of this page. Together: eleven calls, six the expected way, +0.33 percent. The running record, week by week since the week of 7 September 2026, is on the track record, where the setups without the mark can be switched on as well.
The dollar was read right. On Wednesday the flash PMIs came apart: the eurozone surprised sharply higher while the UK and Australia missed, and later that day the American flash PMIs and hawkish words from Barr pushed the dollar and the ten-year yield to multi-year highs. Short EUR/USD stood in the list on four mornings and gained on all four: +0.27%, +0.20%, +0.03% and +0.07%.
The yen was read wrong, six times. Long USD/JPY and long AUD/JPY were recommended through the week because the yen was weak on everything the model reads: the lowest policy rate of the eight at 1.25 percent, a risk mood that ran positive, and a currency sliding towards 160. Long USD/JPY still finished at +0.51 percent over its three mornings, because the dollar was rising faster than the yen. Long AUD/JPY had no such luck: nought out of three and -0.66 percent, the worst of the week.
Then on Friday afternoon Japan's finance minister talked, and the yen posted its best day in weeks on Katayama's jawboning. A macro score cannot see a minister deciding to speak. What it could see was that the risk of one was rising: the intervention warning was on the dashboard on Friday morning, and both yen setups that day were marked low conviction, which is why neither of them carried the mark and neither is in the eleven.
That is the week in one lesson. The dollar moved on things a macro model reads well, which is data against expectations and central bankers saying what they think. The yen moved on a decision by one person to speak, which a model reads badly and can only flag as a risk. Both of those happen most weeks.
This week
- Tuesday: the RBA decides, and Canadian GDP.
- Wednesday: Australian CPI, revised UK GDP, American PCE inflation and the third estimate of US GDP.
- Friday: Tokyo CPI, eurozone inflation, and the American jobs report at 14:30 Amsterdam.
Friday is the one that matters. The dollar has spent a week being carried by data that beat expectations, and the jobs report is the biggest of those numbers. The yen sits at the other end of the same trade with a finance ministry that has now shown it will talk, and the Australian dollar goes into its own inflation figure as the weakest of the eight. Every date and time is on the calendar.