The dollar did the week's work through the bond market rather than any policy event. US yields broke higher — 2-year yields approached 5.00% for the first time in more than two years while the 10-year advanced to 5.20%, the highest since June 2007 — and the Dollar Index cleared 101.00 for the first time since late July, driving fresh cycle lows on Short GBP/USD and Short NZD/USD in the 23–24 September sessions. The SNB held at 0% on 24 September but lifted its conditional inflation forecast for every year to 2028 and restored its standard FX intervention wording, taking USD/CHF to roughly 0.827 and pushing our Long SGD/CHF through both its tactical and strategic objectives. RBNZ Governor Breman warned that persistent oil gains would push near-term inflation above the September Statement's assumptions, and October hike pricing jumped to 75–87% from roughly 20% earlier this month — a hawkish kiwi repricing that our two NZD shorts and Long AUD/NZD now have to survive. Australia's labour report came in mixed — unemployment up to 4.6% against 4.5% expected, with 39,500 jobs added — and yet the RBA is 92–94% priced for a hike on 29 September, with all seven major banks forecasting a move; GBP/AUD rallied into it anyway.
How our views are tracking
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Short GBP/USD — thesis strengthened Sterling fell through our tactical objective even as the 30-year gilt yield rose to 5.90%, which is the terms-of-trade channel our framework prioritised working exactly as specified rather than the rate channel working in reverse. |
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Long EUR/GBP — thesis weakened The euro leg still validates on October and December ECB pricing, but the market has hardened toward a 5 November BoE hike — the single event our invalidator names — and the cross made its cycle high on gilt stress rather than on rate expectations, which is not the mechanism we underwrote. |
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Long SGD/CHF — invalidator triggered, third review The SNB held at 0% but raised its inflation path to 2028 on a weaker franc, which is franc-negative near term and precisely how a first Swiss hike gets pulled into our four-quarter invalidator window — the position is through both published objectives with no upside left on the board. |
Invalidator watch
One invalidator was defused and three escalated. GBP/JPY closed below its named threshold inside the post-BoJ clock, taking our largest position off the critical list; in exchange, the RBNZ's October repricing moved both AUD/NZD invalidators from Clear to Watch and hardened the November BoE limb that sits across four sterling positions at once. All ten positions remain directionally valid — the risk is now concentrated in sizing on the antipodean block, not in direction.
Next week
| Sun Sep 27 | Swiss neutrality referendum | Affects: SGD/CHF |
| Tue Sep 29 | RBA Monetary Policy Board decision | Affects: GBP/AUD, AUD/NZD |
| Wed Sep 30 | Australia Q3 CPI | Affects: GBP/AUD, AUD/NZD |
| Wed Sep 30 | US Q2 GDP third estimate, August PCE | Affects: GBP/USD, NZD/USD, USD/SGD |
| Ongoing | US–Iran talks on the Strait of Hormuz | Affects: GBP/USD, NZD/USD, EUR/GBP |
The RBA on Tuesday is the one that matters: at 92–94% priced, delivery is fully discounted and buys us nothing, while a hold would hit Short GBP/AUD and Long AUD/NZD in the same session.
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