Mon, Sep 21, 2026. Full report (Monday).
Entry 1.40110 · target 1.41250 · stop 1.39400 · reward 1.6× risk · spot 1.40113
This joins my two highest-conviction currency views: the Fed took the funds rate to 4.00% from 3.75% on 16 September with fresh projections and Kashkari said at the weekend that inflation is spreading beyond oil across the economy, while Canada's immediate rate is drifting lower at 2.25% from 2.27%, CPI YoY last fell to 2.32% from 2.64% and September CPI was forecast at -0.1% m/m. The obvious alternative for CAD weakness is AUD/CAD, which I already hold; USD/CAD swaps the Australian leg for the stronger dollar and adds the commodity kicker, with WTI -5.65% on the day and -6.67% over five days on Iran diplomacy, a partial Saudi export recovery and rebounding Hormuz traffic, one desk pointing at $90. Structure is clean: 1.3973-1.3974 has held as the daily low three sessions running and spot closed at 1.4011, 99% of the 20-day range, with the market itself framing the 1.4000 break as the rate-differential trade. Positioning is not crowded against me, CAD specs cut their net short by 32,922 contracts in the week to 15 September, and the catalysts lean my way with retail sales forecast -0.8% on Thursday. Invalidation: Macklem pushing back on the differential at 15:05Z, an Iran escalation that puts crude back above $100, or a daily close under 1.3973.
🟢 Risk-on (mild). Helps AUD, CAD; hurts JPY, CHF.
VIX is 14.81, down 6.50% over five days and at 20% of its 20-day range, and AUD/JPY, the risk barometer, is +1.96% over five days at 111.88. But the S&P 500 is flat, -0.08% over five days at 54% of its range, and gold is -6.22% over twenty days, so this is carry and cyclical demand rather than broad equity euphoria. Geopolitics is a live offset: a survey reports institutional investors rushing to stockpile cash on geopolitical risk, with US sanctions on the ICC being prepared and Iran headlines running. I am downgrading the regime from clear to mild on the flat equity tape.
| Commodity | Direction | Helps | Hurts | Note |
|---|---|---|---|---|
| oil | 🔴 DOWN | JPY, EUR, CHF, GBP | CAD | WTI is 94.63, -5.65% on the day and -6.67% over five days; Brent 98.12, -7.15% over five days, a one-week low. The driver is diplomacy and supply return: hopes of eased US-Iran tension, a partial recovery in Saudi exports and rebounding Hormuz traffic, with one desk pointing WTI at $90. |
| gold | 🔴 DOWN | USD | CHF, AUD | Gold is 4389.6, -0.80% on the day and -6.22% over twenty days, at 24% of its 20-day range despite live Iran and sanctions headlines. Real-yield pressure with the US 10-year at 4.998% is beating the haven bid. |
| copper | 🟢 UP | AUD, CAD | JPY | Copper is 6.720, +1.59% on the day, +6.16% over five days and at 84% of its 20-day range. The Trump-Xi meeting in Washington on 24 September with a trade truce in view is the next catalyst for the China-demand leg. |
| iron ore | 🟢 UP | AUD | JPY | No price feed; the news has iron ore rising for a fourth straight session, with a Wood Mackenzie report noting BHP alone is replenishing Pilbara stocks. That is a supply-tight tape reinforcing the Australian terms-of-trade story alongside copper. |
| natural gas | ⚪ FLAT | — | — | US natural gas is 2.886, -0.89% on the day and -0.35% over five days, mid-range at 58% of its 20-day band though +4.08% over twenty days. The European angle is political rather than priced: Macron says the G7 will meet on the energy crisis in coming weeks, and Stournaras ties an October ECB hike to an energy-cost surge. |
| Currency | View | Conviction | Rate now | Next meeting | Path vs priced | Non-rate factor |
|---|---|---|---|---|---|---|
| USD | 🟢 UP | ●●● | Fed funds target 4.00%, raised from 3.75% on 16 September [Source: Economic calendar]; FRED effective rate 3.63% as of 1 August, pre-dating the hike [Source: Central bank and macro data (FRED)] | not in feed; late October FOMC: ⬆️ hike (leaning) | more hawkish than priced | Trade politics cuts both ways: Bessent and He Lifeng have met on AI, tariffs and minerals and Trump meets Xi in Washington on 24 September, so a truce headline would take some safety bid out of the dollar. |
| AUD | 🟢 UP | ●●● | 4.35% [Source: Book]; FRED series for the Australian rate failed today [Source: Central bank and macro data (FRED)] | not in feed; RBA September meeting, end-September: ⬆️ hike (likely) | more hawkish than priced | Terms of trade are pushing the same way: copper +6.16% over five days, iron ore up a fourth straight session, and AUD/JPY +1.96% confirming the carry bid. |
| CAD | 🔴 DOWN | ●●● | 2.25% as of 1 August, down from 2.27% [Source: Central bank and macro data (FRED)] | not in feed; next BoC decision in October: ➡️ hold (leaning) | as priced | Oil has turned into a headwind, WTI -6.67% over five days with one desk eyeing $90, and Trump tariffs are visibly hitting Canadian dairy and exporters. |
| JPY | 🔴 DOWN | ●●○ | BOJ policy rate below 1.25%, raised from below 1.00% on 18 September [Source: Economic calendar]; FRED immediate rate 0.977% as of 1 August [Source: Central bank and macro data (FRED)] | not in feed; next BOJ decision late October: ➡️ hold (leaning) | as priced | Two-sided: Japanese market holidays this week cut liquidity and have raised intervention speculation with authorities watching closely, while specs are net long 120,359 contracts, 22.2% of open interest, after a 109,563 weekly build. |
| CHF | 🔴 DOWN | ●○○ | SNB policy rate 0.00% [Source: Economic calendar]; 3M interbank -0.045% as of 1 August and still falling [Source: Central bank and macro data (FRED)] | Sep 24 07:30Z SNB Monetary Policy Assessment and press conference [Source: Economic calendar]: ➡️ hold (likely) | as priced | Mild risk-on removes the haven bid, but Iran, ICC sanctions and investors stockpiling cash mean a geopolitical shock is the obvious way the franc gets bought back. |
| GBP | 🔴 DOWN | ●○○ | Bank Rate 3.75%, held on 17 September on a 3-0-6 vote [Source: Economic calendar]; FRED immediate rate 3.7313% [Source: Central bank and macro data (FRED)] | not in feed; next MPC decision in November: ➡️ hold (leaning) | as priced | Sterling is described as facing headwinds against the Aussie, loonie and krone, and it slipped on the hawkish Fed outlook. Specs are net short 58,715 contracts, 18.7% of open interest, so the pessimism is already held. |
| EUR | ⚪ FLAT | ●○○ | not available today, the FRED ECB deposit rate series returned an error [Source: Central bank and macro data (FRED)] | not in feed; ECB decided 10 September, next decision late October [Source: Previous board][Source: News]: ➡️ hold (leaning) | more hawkish than priced | Politics is the drag: Merz called the Mecklenburg-Vorpommern and Berlin state elections a disaster for the CDU, French election concern is feeding speculation about Lagarde's future, and the current account surplus fell to $32.2bn in July. |
View is against the basket of the other six over 2-5 days; conviction is The desk's own, 1 to 3. Scored at 3 trading days.
Three central banks moved last week and the dollar won the comparison. The Fed took the funds target to 4.00% from 3.75% on 16 September with new projections and a press conference, and the path, not the level, is doing the work: Minneapolis Fed's Kashkari said over the weekend that US inflation is spreading beyond oil across the economy and remains too high. The dollar index sits at 100.34, 89% of its 20-day range, up 0.88% in five days, with the US 10-year at 4.998% and 95% of its 20-day range. Against the basket USD is +1.12% over five days and +1.29% over twenty, the strongest currency on the board. The one caveat is at the short end: FRED shows the 2-year at 4.67% on 17 September from 4.74% and the 10-year at 4.94% from 5.01%, so the front end has not extended the hawkish repricing since the meeting.
The yen is the mirror image. The BOJ raised its policy rate to below 1.25% from below 1.00%, the highest since 1995, and the yen sank anyway. The market read it as a dovish hike, and JPY is -1.62% against the basket over five days, the weakest of the seven. Two things sit on top of the rate story: Japanese market holidays this week thin liquidity and have raised intervention speculation, with officials described as watching closely, and large specs are net long 120,359 yen contracts, 22.2% of open interest, after adding 109,563 in a single week. That is a crowded long into an illiquid week with an official put somewhere above here.
Commodities have split the two commodity currencies wide open. WTI fell 5.65% on the day and 6.67% over five days to 94.63, Brent -7.15% to 98.12, on hopes for US-Iran diplomacy, a partial recovery in Saudi exports and rebounding Hormuz traffic. Copper is +6.16% over five days at 84% of its 20-day range and iron ore has risen for a fourth straight session. On top of that CBA now expects the RBA to hike 25bp at the September meeting while the Canadian rate is falling, 2.25% in August from 2.27%, and USD/CAD is pinned at 1.4011, 99% of its 20-day range. The week ahead: Macklem and Lagarde today, Bullock Tuesday, flash PMIs Wednesday, then SNB, Australian employment and the Trump-Xi meeting on Thursday. One note from the record: my conviction-3 currency calls are 8 of 9, conviction-2 calls 2 of 15. I am concentrating conviction where the evidence is unambiguous and marking the rest down to 1.
Three things happened while the market was shut. First, Kashkari said US inflation is spreading beyond oil and remains too high across the economy, hardening the hawkish Fed narrative after Wednesday's hike to 4.00%. Second, the BOJ's hike to the highest rate since 1995 was digested as dovish, with weekend coverage headlining a sinking yen and flagging that Japanese holidays this week cut liquidity and raise intervention speculation. Third, oil kept falling into the Asian open on Iran diplomacy hopes, a partial Saudi export recovery and rebounding Hormuz traffic, WTI to 94.63 and Brent to 98.12. Also on the tape: Stournaras refused to rule out an October ECB hike, and Merz called his party's state election results a disaster.
The open priced it as a dollar bid, unevenly. USD/CAD gapped +29 pips to 1.40113, 43% of a daily ATR and the largest move, because it carries both the dollar and the oil story. GBP/USD -17 pips and EUR/USD -12 pips, both roughly a quarter of an ATR, USD/CHF +16 pips. USD/JPY gapped only +22 pips to 157.078, 11% of an ATR, which is small for a currency that lost 1.62% against the basket last week: the intervention watch is doing the capping. AUD/USD gapped just +5 pips, the smallest, with copper and iron ore holding the Aussie up against the dollar bid.
| Impact | Ccy | Headline | Pushes | Reading |
|---|---|---|---|---|
| 🔸 medium | USD | Minneapolis Fed's Kashkari says US inflation is spreading beyond oil across the economy and remains too high | USD up → USD/CAD up, EUR/USD down | A sitting Fed official broadening the inflation diagnosis three days after the hike to 4.00% keeps the October hike leaning alive. It extends the hawkish repricing the market started on 16 September rather than fading it. |
| ▫️ small | EUR | ECB's Stournaras does not rule out an October hike if energy costs or inflation surge | EUR up → EUR/USD up, EUR/AUD up | Conditional language from a Governing Council member against a market that treats the ECB as parked, and euro area inflation expectations rose across all horizons in August. Not a signal yet, but it is the first crack in the hold consensus and a mild headwind to my EUR/USD short. |
| ▫️ small | USD | US prepares sweeping sanctions on the International Criminal Court; survey shows institutional investors stockpiling cash on geopolitical risk | risk down → CHF, JPY, USD up | This is why I downgraded the risk regime from clear to mild: the VIX is at 20% of its 20-day range but the S&P is flat and cash is being hoarded. A geopolitical shock is the obvious route to a franc and yen bid against my carry-side positions. |
| ▫️ small | EUR | Merz calls the Mecklenburg-Vorpommern and Berlin state election results a disaster for the CDU | EUR down → EUR/USD down | European politics stays a drag on the euro alongside French election concern and a current account surplus that fell to $32.2bn in July. It is background weight, not a rate-path change. |
| Size | Change | |
|---|---|---|
| Risk | ▫️ small | risk sentiment risk on: clear → mild |
| USD | ▫️ small | conviction 2 → 3 |
| CAD | ▫️ small | conviction 2 → 3 |
| CHF | ▫️ small | conviction 3 → 1 |
| EUR | ‼️ big | direction down → flat |
| EUR | ‼️ big | path vs priced: as priced → more hawkish |
| Impact | Ccy | Headline | Pushes | Reading |
|---|---|---|---|---|
| 🔥 large | CAD | Oil hits one-week low: WTI -5.65% on Iran diplomacy hopes, partial Saudi export recovery and rebounding Hormuz traffic | CAD down → USD/CAD up, AUD/CAD up | The terms-of-trade support that had been offsetting Canada's rate disadvantage is gone, with WTI -6.67% over five days and one desk pointing at $90. That leaves the widening US-Canada differential as the only thing driving the loonie. |
| 🔸 medium | AUD | CBA now expects the RBA to hike the cash rate 25bp at the September meeting | AUD up → EUR/AUD down, AUD/CAD up | A major domestic bank moving to a hike ratifies Bullock's tilt and the 95% market pricing, so the Australian path stays more hawkish into Bullock Tuesday and employment Thursday. It is the strongest live policy path among the seven. |
| 🔸 medium | JPY | Yen slides toward a two-week low after a dovish BOJ hike; Japan holidays cut liquidity and raise intervention speculation | JPY down, but two-sided → USD/JPY up with tail risk | The highest policy rate since 1995 produced a weaker yen, which tells you the guidance disappointed, and commentary now sees the next hike only by the turn of the year. Thin holiday liquidity with authorities watching closely is the reason I hold the view without booking it. |
| ▫️ small | AUD | Iron ore rises for a fourth straight session; copper +1.59% on the day with the Trump-Xi meeting set for 24 September | AUD up → AUD/CAD up, EUR/AUD down | The Australian terms-of-trade leg is confirming the rate story rather than contradicting it, with copper at 84% of its 20-day range. A trade truce headline on Thursday would extend it. |
TRADES (The desk's own, target/stop/expiry): 0 won, 5 lost, 2 expired/closed of 7 (0%), net -372 pips; 5 open Conviction 2: 0 won, 4 lost, 1 expired/closed of 5 (0%), net -206 pips 4 of 4 conditions: 0 won, 1 lost of 1 (0%), net -32 pips 3 of 4 conditions: 0 won, 2 lost, 1 expired/closed of 3 (0%), net -132 pips 0 of 4 conditions: 0 won, 1 lost of 1 (0%), net -42 pips IDEAS (direction at the horizon): 2 right, 2 wrong, 2 flat of 6 (33%), net -180 pips; 18 pending, next due Mon 21 Sept CURRENCY CALLS (direction vs basket, 3 trading days): 12 right, 13 wrong, 8 flat of 33 (36%); by conviction 4: 1/5, conviction 3: 8/9, conviction 2: 2/15, conviction 1: 1/4; 23 pending
One trade today: USD/CAD long at the 1.4000 break, which pairs my two conviction-3 currency views and the oil collapse. I stayed at one because the book already carries three Australian dollar longs and a euro short, and adding a second dollar long is as much concentration as I want while the 2-year sits at 4.67%, down from 4.74%, telling me the front end has not extended the hawkish repricing. Watch list for the next 48 hours: Macklem at 15:05Z today, Bullock at 03:10Z Tuesday, euro area and UK flash PMIs Wednesday, then the SNB, Australian employment and Canadian retail sales stacked on Thursday. I am wrong on the loonie if Macklem pushes back on the differential or an Iran escalation puts crude back above $100, and I am wrong on the whole carry side of the book if Tokyo intervenes in the thin holiday market and drags the franc bid back with the yen.
Data warnings: news: FXStreet: 403