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The US dollar will slide against peers again in 2026 though the moves will be more muted than in 2025, according to Emirates NBD.The regional banking group expects the dollar will decline compared with peer currencies in 2026 as policy differentials increasingly move against it.Among major central banks, the Federal Reserve will stand out as still cutting policy while peers will either keep rates on hold or lean towards tighter policy, Emirates NBD said in a report.On the surface, the US dollar doesn’t look like a natural candidate to weaken. Growth in the US economy will be faster than all major peers in 2026, based on consensus projections, and inflation will also be materially higher.But a softening labour market is encouraging more dovish views from the Fed even amid the higher inflation environment.The researcher’s expectation is for another 75 bps of cuts from the Fed in 2026 compared with no change in policy from the European Central Bank and hikes from the Bank of Japan.Emirates NBD expects that the euro will extend its 2025 gains against the dollar in 2026 although the scale of appreciation will be far more muted.Economic activity in the eurozone remains sluggish — the regional economy expanded by just 1.4% year-on–year (y-o-y) in Q3-2025 — but that is a material improvement from the static levels of activity recorded in 2024.Inflation in the eurozone will remain relatively stable in 2026, close to target levels of around 2%. After cutting rates by 100 bps in 2025 the researcher does not expect that the ECB will cut rates any more in 2026, keeping the deposit facility at 2%.Several ECB policymakers have even been making a case that upside risks to growth may warrant the bank needing to actually hike rates though we are not expecting that to be an imminent change in direction.While the eurozone’s economy may not be showing signs of vigour, it does appear to be at least stable.Narrowing rate differentials will favour the euro in 2026 though the momentum on rates will be more to do with the Fed than the ECB or eurozone economic dynamics.The rearcher expects EURUSD will move from 1.17 at the end of 2025 to 1.21 by the end of 2026, an appreciation of about 3.4% compared with 13% gains in 2025.The Japanese yen looks the most likely candidate for strengthening in 2026 though near-term political noise means that any gains could be delayed until later in the year.Economic activity will decelerate markedly in 2026 as trade and investment cool. But in an effort to restore some growth and inflation momentum, Japan’s new government has approved a large stimulus package worth a total of $135bn in direct and indirect support measures, the report said. 

The anticipated launch of Qatar’s North Field gas expansion, which is expected to come online around the middle of 2026, will underpin GCC hydrocarbon segment growth, according to Emirates NBD.The regional banking group has forecast Qatar’s hydrocarbons growth at 7.0% next year and 8.0% in 2027.While there will be a modest slowdown in the region’s non-hydrocarbons activity next year, Emirates NBD anticipates that growth in the hydrocarbons sector, which still accounts for nearly 30% of the GCC economy, will accelerate and expand by 6.5%. This would be the fastest rate of growth since 2022 when the region benefitted from the post-Covid surge in demand for oil and compares with an estimated 4.5% growth in 2025.“The surge in growth does not reflect a particular rise in forecast global demand next year, with growth expected to be sluggish at best, but rather in large part a change in strategy from OPEC+ that has seen it pivot to target market share rather than pricing,” Emirates NBD noted.This will boost Saudi Arabia’s oil GDP in particular, where it forecasts growth of 8.0% next year, while Kuwait will pick up to 6.0%, from an estimated 3.5% in 2025.Bahrain is not a member of OPEC+, but should benefit from the Bapco modernisation programme, which was introduced in late 2024 and expected to boost activity.The researcher’s broad expectation for non-oil activity in 2026 is that there will be a modest slowdown across the bloc, but this is largely on the back of base effects following several years of higher-than-average growth coming out of the Covid-19 pandemic.The conditions that have supported growth through the past year are set to continue, with the global environment arguably set to be more conducive to stimulating economic activity than was seen in 2025.“We forecast weighted average non-oil growth of 4.4% in 2026, down from an estimated 4.8% in 2025, with Qatar, the UAE and Saudi Arabia set to be the outperformers once again,” Emirates NBD noted.On aggregate, the GCC economies will see stronger growth next year, with almost all of the six economies that constitute the bloc set to see a faster expansion than Emirates NBD estimated for 2025. This, it noted, will be driven by an anticipated acceleration in hydrocarbons activity, while non-oil growth will remain strong, albeit slowing from recent levels.Non-oil growth will be supported by growing populations, the expansion of new industries, and high levels of public investment. Lower oil prices will keep pressure on budgets, but this will be offset in part by higher production levels, and the regional governments remain committed to their various development agendas. 

Lower bank rates in Qatar will be an additional boost to consumers and corporates, Emirates NBD Research has said in a report.Recently, the Qatar Central Bank (QCB) decided to reduce the current interest rates for deposits, lending and repo by 0.25% or 25 basis points (bps). The new rates took effect on September 18.The QCB’s deposit rate (QCBDR) is now 4.35%, lending rate (QCBLR) 4.85% and repo rate (QCBRR) 4.60%.The QCB said the rate cut followed its “assessment of the current monetary policy of Qatar.On the impact (of the US Federal Reserve rate cut) on GCC economies, Emirates NBD Research said, “The rate cut has been matched by the GCC given that the currency pegs mean that monetary policy tends to move in lockstep with that of the Fed.Besides Qatar, the UAE, Saudi Arabia, Bahrain, Oman, and Kuwait central banks have all cut their benchmark policy rates by 25bps, Emirates NBD noted.In a report, the UAE banking group said: “Lower rates will be an additional boost to consumers and corporates in the GCC economies. Credit growth to the private sector has accelerated in 2025 for both the UAE and Saudi Arabia compared with 2024.“In the UAE, banking claims on the private sector have recorded an average year/year growth of more than 8% this year, compared with 7% for 2024. In Saudi Arabia, credit demand has been even more robust with growth of more than 14% year-to-date up to July compared with around 11% in 2024.”The report noted: “As rates move lower, that will free up more income for consumption and investment and at the margin create more demand for credit. In a recent Central Bank of the UAE survey on credit demand, interest rates were the least critical variable cited as affecting demand for loans from the domestic banking system with corporates instead seeking to match the performance of the non-oil economy.”Emirates NBD said: “The US Federal Reserve cut rates by 25 bps (0.25%) at the September FOMC, in line with our expectations. This was the first rate change from the FOMC since December 2024 and takes the upper bound of the benchmark Fed funds rate to 4.25%.”According to the bank, the next FOMC meeting is at the end of October and will very much be a live meeting with the expectation of another 25bps cut nearly 90% priced in by markets following the September meeting. Should economic data continue to follow the path seen in the last few months — moderate inflation pressures with worsening labour market conditions — then an October cut looks more likely than not. We still expect a rate cut at the December FOMC at this time.For 2026, the Fed projected a more hawkish stance than markets are expecting as it keeps an eye on the inflationary risks of tariffs and sticky services inflation.“We still expect that the Fed will need to cut rates next year, targeting an end of 2026 Fed Funds rate at 3% by end of year,” Emirates NBD noted.