Drivers for the Week of August 31, 2026

The combination of persistent inflation risks and divergent central-bank policies should keep the USD firm while creating selective opportunities across major currencies.

• Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks pushed market-implied odds of a 25-basis-point September 16 hike to 60%, up from 35%, while futures imply 60 basis points of tightening over the next 12 months.
• US August nonfarm payrolls are expected to increase by 55,000 after falling by 23,000 in July, with unemployment holding at 4.1% versus the FOMC’s 4.3% 2026 projection; the August ISM surveys and September 11 CPI will be key tests of inflation pressure.
• The Bank of Canada is expected to hold its 2.25% policy rate for a seventh consecutive meeting, and BBH views market pricing of 75 basis points of hikes over 12 months as too aggressive, potentially supporting USD/CAD near 1.4000.
• The RBNZ is expected to raise its OCR by 25 basis points to 2.75%, but BBH expects its updated rate path to remain below market pricing, with swaps implying 3.75% over two years versus the RBNZ’s projected 3.25% peak in Q3 2028.
• Eurozone headline inflation is forecast to rise to 3.3% in August from 2.9% in July, supporting expectations of an ECB hike to 2.50%, while Swiss inflation is expected at only 0.5%, leaving the SNB at 0.00% and weighing on the franc.

Takeaway: Investors should expect a firm USD and continued currency differentiation as US data keep a September Fed hike in play, while softer policy expectations in Canada and New Zealand create downside risks for CAD and NZD; EUR/USD should remain supported, whereas CHF remains vulnerable.