Bias: Range-bound, current USD/PKR sits near the 90-day average and at the lower end of the last three months' range.
Key drivers:
- Rate gap: The Fed is expected to cut rates toward neutral in 2026, narrowing the USD's yield advantage vs PKR and reducing demand for dollar funding.
- Risk/commodities: Inflation in Pakistan is seen cooling, with muted global commodity prices easing import costs and reducing PKR pressure, though energy costs could still bite.
- One macro factor: US payrolls and unemployment data due soon could shift Fed easing bets and the dollar’s path, with speeches by policymakers adding color.
Range: USD/PKR is expected to stay within the recent band, trading with modest drift and a potential test of the lower end if external cues stay supportive.
What could change it:
- Upside risk: cleaner US jobs data or hawkish Fed tone could lift the dollar.
- Downside risk: softer US data or clearer easing signals from the Fed could lift PKR.
