The USD declined 0.45% yesterday after the ECB's rate decision pushed the EUR higher and increased expectations for a 50-basis-point Fed rate cut. Articles published by the Wall Street Journal and Financial Times yesterday suggested the Fed was seriously considering a larger cut, and swap odds now imply a nearly 50/50 probability between 25 and 50-basis-point easing moves. Monthly PPI data came in slightly above expectations in August, although categories that contribute to the Fed's preferred inflation gauge were muted. The previous reading was revised lower. Jobless claims data remained relatively steady.

Heading for its third consecutive daily drop, the USD has lost 0.35% today, and 2-year Treasury yields are testing 2-year lows. Import and export price index data fell more than forecast. University of Michigan sentiment data will be released at 10 AM. The Fed decision is scheduled for Wednesday, September 18th.

EUR/USD rose 0.55% yesterday and has increased another 0.25% today, trading essentially flat compared to this time last week. The ECB cut rates by 25-basis-points yesterday, as expected, while inflation projections remained unchanged. Lagarde suggested the ECB would consider an October rate cut if the economy deteriorated, with the December decision providing them with more data to fully assess the evolution of economic conditions. Growth forecasts were revised lower, and Lagarde noted that eurozone growth risks were tilted to the downside. She also said that domestic inflation remains high due to "wages still rising at an elevated pace."

GBP/USD rose 0.6% yesterday and is 0.15% higher today, trading marginally lower than this time last week. The Thursday, September 19th BOE rate decision currently has just 17% odds of a rate cut. The BOE will also decide on the pace of its balance sheet reduction in the coming year. Investors will receive the UK inflation report for August the day before the BOE decision.

USD/CAD rose marginally yesterday and is flat today, trading about 0.4% higher than this time last week. The Canadian Dollar is a clear underperformer in the G10 space and is heading for its second weekly decline. Next week's data highlights include CPI (Tuesday), the BOC's summary of deliberations from the most recent decision (Wednesday), and retail sales (Friday). Investors have fully priced the October 23rd BOC decision for a rate cut, with another 8 basis-points of easing also priced for the decision date.