Drivers for the Week of October 5, 2026

The US dollar remains biased to the upside despite softer US payrolls, while diverging monetary-policy expectations create opportunities across major and emerging-market currencies.

• September US payroll gains were only 29k versus 90k expected, previous months were revised down by 60k, unemployment rose to 4.2%, and wage growth slowed to 3.0% year over year, reducing the odds of an October Fed hike without overturning the tightening bias.
• The US economy added an average of 50.7k jobs per month over the three months to September, while participation rose to 61.8%, suggesting that the higher unemployment rate reflected stronger labor supply rather than a material deterioration in hiring.
• US services ISM is expected at 55.0 for September, with Prices Paid at 73.2; Canada is forecast to add only 5.0k jobs after losing 41.7k in August, making the market pricing of 100 basis points of Bank of Canada hikes look too aggressive.
• Swedish CPIF inflation is expected to rise to 1.5% from 0.7%, supporting a 25-basis-point Riksbank hike to 2.00%, while Norwegian underlying inflation at 3.0% could revive expectations for a further hike from the current 4.50% policy rate; firm Japanese wages are not expected to trigger a more aggressive BOJ cycle, leaving USD/JPY in a 155.00–160.00 range.
• Peru is expected to resume tightening with a 25-basis-point hike to 4.50%, Poland is expected to hold at 3.75% but signal a hawkish stance, and India is expected to hike to 5.50% to support the rupee and respond to 7.8% second-quarter GDP growth; Brazil’s close presidential race leaves the BRL sensitive to fiscal outcomes, with public debt rising from 71.7% of GDP in January 2023 to 82.5% in July 2026.

Takeaway: Investors should retain an upward bias on the dollar because of US growth and foreign demand for US assets, while favoring currencies with supportive carry or tightening prospects such as NOK, PEN and potentially PLN; CAD remains vulnerable, and Brazil’s BRL outlook depends heavily on the runoff election and fiscal policy.