FX Daily analysis
Dollar index drifts lower as BRL sells off hard and sterling outperforms
The dollar index gave back a little ground, down 0.07% on the day and still negative on the month. The real told the real story: USD/BRL rose 1.76% on the session and is up 7.72% on the week, by far the largest move in the pack relative to its own volatility.
Takeaways
- USD/BRL is the session's standout, up 1.76% on the day and 7.72% on the week, a 1.85 standard deviation move.
- The dollar index fell 0.07% on the day but sits 0.15% higher on the week, a mixed read on direction.
- Sterling rose 0.46% against the dollar even as the BoE's last move was a cut, and GBP/USD now trades a touch below its one-month high.
- The US 2-year yield fell 6bp on the day and 28bp on the month, and most G10 pairs did not trade with that move today.
The dollar
The dollar index closed at 101.964, down 0.07% on the day. That leaves it up 0.15% on the week but down 0.13% on the month, a session move that runs against the five-day trend. The index sits 0.60% below its one-month high of 102.58 and 0.35% above its one-month low of 101.61. A z-score of -0.27 says today's move was unremarkable by the index's own recent standard.
The US 2-year yield fell 6bp on the day to 4.61%, extending a 28bp decline over the month. The 10-year fell 7bp on the day but is up 2bp on the week. The dollar index's 60-day correlation to the 2-year's daily change is 0.39, a loose but positive relationship. Today's front-end move pointed toward dollar softness and the index did fall, though by a small amount.
G10 majors
Sterling was the main story in G10. GBP/USD rose 0.46% on the day, a 1.14 standard deviation move, to 1.33894, within 0.11% of its one-month high of 1.34039. The pair is up 0.94% on the month despite being down 0.11% on the week, and it trades above its 50-day average of 1.3316. The BoE's policy rate stands at 3.75% as of October 26, with the last decision a 25bp cut on December 18, 2025, leaving the rate 25bp below the top of the Fed's range. The pair's correlation to the US 2-year over 60 days is essentially zero at -0.00, so today's gain did not track the front-end yield move.
The dollar fell against most of the rest of the bloc. USD/CHF dropped 0.37% on the day, an 0.85 standard deviation move, and is down 1.29% on the month. USD/JPY fell 0.20% on the day to 157.519 but remains up 0.66% on the week, trading just below its 50-day average of 157.293. EUR/USD rose 0.09% to 1.11657, a small daily gain inside a 0.50% weekly loss and a 1.43% monthly loss, with the pair just 0.32% above its 52-week low of 1.11297. The ECB's deposit rate is 2.50% as of October 30, last moved 25bp higher on September 16, a gap of 150bp below the Fed.
USD/CAD slipped 0.11% to 1.3971, sitting exactly at its one-month low and just 0.12% above its 200-day average of 1.39543. The pair is down 1.86% on the month. The BoC's rate is 2.25%, last cut 25bp a year ago to the day, 175bp below the Fed. AUD/USD fell 0.32% on the day even as the RBA's rate sits 60bp above the top of the Fed's range, the only G10 currency with a positive differential to the dollar. NZD/USD was little changed, up 0.06%, but is down 0.92% on the week.
Emerging markets
USD/BRL was the clear outlier across EM, up 1.76% on the day and 7.72% on the week, a 1.85 standard deviation move that puts the pair at its one-month high of 5.4397. Brazil's policy rate stands at 13.75%, last cut 25bp on September 17, a differential of 975bp over the Fed, among the widest in the pack. USD/MXN rose 0.76% on the day and sits at both its one-month and 52-week high of 18.774, up 3.86% on the month, with Banxico's rate at 6.50% last cut in May, a 250bp premium to the Fed. USD/TRY edged up 0.20% to a fresh one-month and 52-week high of 49.9308, following the CBRT's 100bp cut on October 23 that still leaves the policy rate at 36.00%, a gap of 3,200bp over the Fed, the widest differential in the set.
In Asia, the dollar lost ground against most currencies. USD/KRW fell 0.52% on the day, though it remains down 1.73% on the month in dollar terms. USD/INR fell 0.28% to 94.94, now 0.66% above its one-month low, with the RBI's rate at 5.50% following a 25bp hike on October 7. USD/CNY fell 0.19% to 6.6533, sitting at both its one-month and 52-week low, with China's rate unchanged at 3.00%. In EMEA, USD/ZAR rose 0.59% to a one-month high of 16.7073, up 1.75% on the month, with South Africa's rate at 7.25% after a 25bp hike on September 25, a 325bp premium to the Fed.
Rate differentials and central banks
The Brazilian real's slide stands apart from the rate story. The BCB's policy rate is unchanged since the September 17 cut to 13.75%, a 975bp premium to the Fed that has sat there for weeks without producing this kind of move before, so the carry differential alone does not explain a 7.72% weekly swing. The pair's correlation to the US 2-year is only 0.12, too weak to account for the session either. The pack does not show what moved alongside USD/BRL today, so the setup is noted and nothing more is claimed.
Across G10, correlation to the US 2-year yield was weak almost everywhere. The dollar index's 60-day correlation of 0.39 is the highest in the table, and the index did fall as the 2-year yield fell, consistent with that relationship. But EUR/USD's correlation is just 0.08, GBP/USD's is -0.00, and USD/CAD's is -0.05: none of the day's major moves tracked the front-end yield in a way the correlation history would predict. USD/JPY's correlation is negative at -0.10, and the yen gained against the dollar on a day the 2-year yield fell, which is directionally consistent even if the historical correlation argues against reading much into it.
The rate differentials remain wide and largely unchanged by anything in today's pack. The RBA's 60bp premium over the Fed is the only positive G10 gap, and AUD still fell 0.32% on the day. The BoE's 25bp discount to the Fed did not stop sterling's gain. In EM, the carry gaps are far wider: Turkey at 3,200bp over the Fed even after a cut, Brazil at 975bp, South Africa at 325bp, Mexico at 250bp. None of the day's currency moves lined up cleanly with the size of these differentials.
Levels that matter
- USD/BRL closed at 5.4397, at its one-month and 52-week high, with its 50-day average at 5.12264 below.
- USD/TRY closed at 49.9308, at its one-month and 52-week high, with its one-month low at 49.3184 below.
- USD/MXN closed at 18.774, at its one-month and 52-week high, with its one-month low at 18.1867 below.
- GBP/USD closed at 1.33894, just below its one-month high of 1.34039, with its 50-day average at 1.3316 below.
- Dollar index closed at 101.964, below its one-month high of 102.58 and above its one-month low of 101.61.
- EUR/USD closed at 1.11657, below its one-month high of 1.12347 and just above its 52-week low of 1.11297.
- USD/JPY closed at 157.519, below its one-month high of 158.52299 and just above its 50-day average of 157.29306.
- USD/CAD closed at 1.3971, at its one-month low, with its 200-day average at 1.39543 just below.
Every pair
| Pair | Last | Day | Week | Month | Year to date | Policy rate |
|---|---|---|---|---|---|---|
| The dollar | ||||||
| Dollar indexindex | 101.96 | −0.07% | +0.15% | −0.13% | +3.60% | n/a |
| G10 majors | ||||||
| EUR/USDUSD per EUR | 1.1166 | +0.09% | −0.50% | −1.43% | −4.98% | 2.50%ECB, −150bp vs Fed |
| USD/JPYJPY per USD | 157.52 | −0.20% | +0.66% | −0.03% | +0.50% | 1.25%BoJ, −275bp vs Fed |
| GBP/USDUSD per GBP | 1.3389 | +0.46% | −0.11% | +0.94% | −0.62% | 3.75%BoE, −25bp vs Fed |
| USD/CHFCHF per USD | 0.8249 | −0.37% | +0.62% | −1.29% | +4.15% | 0.00%SNB, −400bp vs Fed |
| USD/CADCAD per USD | 1.3971 | −0.11% | −0.23% | −1.86% | +1.86% | 2.25%BoC, −175bp vs Fed |
| AUD/USDUSD per AUD | 0.7035 | −0.32% | +0.22% | +1.29% | +5.35% | 4.60%RBA, +60bp vs Fed |
| NZD/USDUSD per NZD | 0.5633 | +0.06% | −0.92% | −0.04% | −2.18% | 2.75%RBNZ, −125bp vs Fed |
| Emerging markets | ||||||
| USD/CNYCNY per USD | 6.6533 | −0.19% | −0.37% | −0.76% | −4.90% | 3.00%PBoC, −100bp vs Fed |
| USD/MXNMXN per USD | 18.7740 | +0.76% | +0.28% | +3.85% | +4.39% | 6.50%Banxico, +250bp vs Fed |
| USD/BRLBRL per USD | 5.4397 | +1.75% | +7.72% | +5.03% | −1.40% | 13.75%BCB, +975bp vs Fed |
| USD/INRINR per USD | 94.940 | −0.28% | +0.24% | −1.03% | +5.53% | 5.50%RBI, +150bp vs Fed |
| USD/KRWKRW per USD | 1,333.44 | −0.52% | +0.56% | −1.73% | −7.63% | 3.00%BoK, −100bp vs Fed |
| USD/ZARZAR per USD | 16.7073 | +0.59% | +1.38% | +1.75% | +0.94% | 7.25%SARB, +325bp vs Fed |
| USD/TRYTRY per USD | 49.9308 | +0.20% | +0.40% | +1.84% | +16.13% | 36.00%CBRT, +3,200bp vs Fed |
Moves as each pair is quoted: a rise in USD/JPY is a stronger dollar, a rise in EUR/USD a stronger euro. Policy rates as the analysis had them on file, against the top of the Fed's range.
Sources
Exchange rates and the dollar index at the session close from Yahoo Finance; the Fed and ECB rates and Treasury yields from FRED. Every figure in this analysis was checked against the session's verified fact pack. The text was drafted with a language model from that fact pack; the methodology explains how.
For information only. Not investment advice.