As the global economy continues to evolve, central banks around the world are facing a dilemma. On one hand, they must navigate the challenges of a rapidly changing economic landscape, while on the other, they must ensure that their monetary policies align with their country’s interests. The People’s Bank of China (PBOC), in particular, is grappling with these issues as it navigates the next moves of the Renminbi (RMB).

In recent weeks, the USD-CNY fixing has come under downward pressure, sparking speculation about the PBOC’s next steps. With a potential meeting between President Trump and Chinese President Xi Jinping around the APEC summit from 27 October to 1 November, investors are eagerly awaiting any signs of a possible resumption of downward pressure on the RMB. However, the PBOC’s comfort level with its current monetary policy stance must also be taken into account when considering these developments.

Meanwhile, other central banks around the world are also grappling with their own policy dilemmas. The Reserve Bank of Australia (RBA), for instance, is widely expected to keep its policy rate steady at 3.60%, despite the currency’s recent strengthening beyond model estimates versus the USD. This contrasts with other central banks such as the Federal Reserve, Bank of Canada, and Bank of England, which may need to ease further in light of their respective economic circumstances.

Politics will also play a significant role in shaping the currency landscape this week. The UK’s Labour Party Convention takes place through Wednesday, with Chancellor Reeves’ speech expected to be closely watched, particularly given the Autumn Statement on 26 November is lingering. For GBP, it comes down to what the Chancellor will have to say, as investors await any signs of potential policy changes. Lastly, the Japanese leadership election on 4 October is likely to keep the JPY in a holding pattern until the outcome is known.

The RMB’s next moves and central banks’ dilemma are complex issues that will continue to evolve in the coming weeks. As investors await any signs of potential policy changes, it is crucial to stay informed about these developments and their impact on the currency landscape.