Dollar Mixed To a Bit Lower
The ECB's decision to leave rates unchanged will give the Bank's credibility another hit, at the expense of European growth potential. The euro's recent rise may well come undone as well, as the FX market will likely determine the ECB is so far behind the curve, it isn't even funny anymore. We look to sell the single currency on any rally, ultimately looking for a break below 0.9950 later in the session. USD-JPY has maintained a tight range overnight, and can be expected to run into Japanese exporter offers over the 122.00 region. Though the dollar has decoupled from the equity market to a degree of late, US stocks may well lead the dollar's direction today, especially the day after a surprise 50 bp Fed rate cut. Elsewhere, USD-CAD managed to take out stops at 1.5520 earlier, and is now set to test under 1.5500. Under 1.5490 the road appears clear for a run to 1.5400. Fed rate cut related AUD-USD gains may be about spent now, sources now looking for a return to the 0.5600 region. The market will now look forward to weekly jobless claims and preliminary Q3 productivity at 13:30 GMT, while at 15:00 GMT, September inventory data will be on tap.
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