hsbc.com.hk - WPB FX Forecast Outlook en

Foreign currency "rates" are simply ratios between the relative value of the pair. Their movement affects both the profitability of trade and the value of the business companies do when translated into your target currency. Some people believe that gold represents the absolute value and fiat currencies should be measured against its value (but then some people believe the earth is flat, believe in the tooth fairy and that Santa Clause is getting his beauty rest after a hard night of travel by sled and chimney).

Summary
EUR: EUR-USD is expected to rise steadily, driven mainly by external factors, while
fiscal policy across the Eurozone is likely to become moderately supportive.

GBP: The GBP may rise against the USD in the short term but is likely to
underperform other G10 peers.

JPY: USD-JPY is likely to correct lower over the near term before potentially drifting
modestly higher, with Japan’s ongoing fiscal challenges being a key risk.

CHF: The CHF seems vulnerable if Switzerland’s exports slow, current account stalls
or global growth and rate differentials rise.

AUD: The AUD is likely to strengthen further, supported by favourable risk conditions
and robust domestic factors.

NZD: The NZD could recover from the pronounced weakness in 2H25 in 2026,
supported by potential for tighter monetary policy and a stabilising economy.

CAD: USD-CAD is likely to move largely sideways in 2026, but uncertainty
surrounding a potential review of the United States–Mexico–Canada Agreement
(USMCA) may introduce some downside risk for the CAD.

RMB (CNY): The RMB is expected to appreciate gradually in 2026, supported by
domestic priorities and favourable cross-border flows.

SGD: The stable, low-yielding SGD is expected to remain a preferred funding
currency in 2026.

INR: The INR could have a tactical recovery in 1Q, but this strength may not persist
throughout the remainder of 2026.

MYR: We call for cautious optimism for the MYR, as Malaysia’s basic balance may
deteriorate due to procurement and ODI obligations stemming from the US-Malaysia
trade agreement.

Key upcoming rate announcements
Date Central bank
28 January The Bank of Canada
30 January (3am HKT) The Federal Reserve
3 February The Reserve Bank of Australia
5 February The Bank of England
5 February The European Central Bank
6 February The Reserve Bank of India

Jeff