The greenback fell the most against euro and the New Zealand dollar and was the most resilient versus Aussie and Sterling. The day started with very little consistency for the greenback but by the end of the NY session, despite losses in stocks, it was clear that the Fed’s dovish outlook made the dollar less attractive. The latest US reports were mostly weaker than expected. Housing starts and building permits declined in the month of August while the Philadelphia Fed index failed to show improvements like the Empire State survey. Yet USD/JPY rallied thanks in part to lower jobless claims. The Bank of Japan’s decision to leave monetary policy unchanged was widely expected. Although they upgraded their economic assessment, there was very little reaction in the Yen because at the end of the day, the government is in no position to increase or decrease stimulus. USD/JPY which sold off for 4 consecutive trading days should bounce if equities recover but the trend of mixed US data combined with the Fed’s dovish long term policy means the path of least resistance should be lower.


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