Dollar trades generally higher in today so far thanks mainly to post ECB weakness in Euro. The dollar index extends recent rally from May's low at 91.91 and reaches as high as 98.95 so far. Technically, the index is also picking up some upside momentum. EUR/USD dipped through 1.0911 key near term support which signals more downside ahead towards 1.04/05 support zone. The greenback also strengthens against Asian currencies with the Chinese Yuan hitting seven-month low. Fed fund futures are pricing in 74.9% chance of December hike after recent comments from Fed officials suggested that it's generally acceptable among policy makers. Canadian data, retail sales and CPI, will be the main focus today in a relatively light economic calendar.
Yesterday's ECB meeting was a dovish one although policymakers left the policy rate and the QE program unchanged. President Mario Draghi indicated that there were no discussions about tapering or extending QE at the meeting. Yet, he reassured that 'an abrupt end to QE is unlikely'. It is getting more likely that ECB would act again in December as the accompanying statement suggested explicitly that the new staff macroeconomic projections due by then would help the council's assessment.
IECB kept the main refi rate at 0%, and the marginal lending facility rate and the deposit facility rate at at 0.25% and -0.40%, respectively. It would continue buying assets at a monthly pace of 80B euro at least until March 2017, with any extension to the program contingent on whether inflation is evolving as expected toward the ECB's 2% target. The central bank reiterated that interest rates would 'remain at present or lower levels for an extended period of time', and 'well past' the horizon of the asset purchase program. More in Dovish ECB Awaits Economic Forecasts For Action In December.
BoJ governor Haruhiko Kuroda said today that "there may be some modification to our forecast that inflation will hit our 2 percent target during fiscal 2017." He also noted that under the current "Yield Curve Control" framework, "if 10-year government bond yields fall well below our target of around zero percent, we may slow our bond purchases." Though, he emphasized that "we don't see an immediate possibility of our bond buying falling sharply from the current pace."