The USD depreciated by 0.2% yesterday, erasing pre-North American session gains of over 0.5% following Wednesday's 50-basis-point rate cut. Anticipations of a soft landing in the US propelled equities higher, with the S&P 500 reaching its 39th record level in 2024. US Treasuries exhibited mixed performance, as shorter-dated yields underperformed longer tenors. Jobless claims data exceeded expectations.

Today, mixed trading within the G10 currency space has resulted in the USD remaining essentially flat compared to yesterday's close. US equities have retreated amid soft earnings news, including economic bellwether FedEx, which missed profit estimates and expressed caution regarding its outlook for the year ahead.

EUR/USD appreciated by 0.4% yesterday and is currently 0.1% lower. Compared to this time last week, the pair is trading approximately 0.55% higher. Yesterday, ECB member Centeno suggested that the ECB might need to accelerate the pace of easing to prevent inflation from falling short of staff forecasts. ECB member Knot indicated his comfort with the market's rate cut expectations. ECB member Schnabel emphasized the broad-based and global nature of price pressures in the services sector, contributing to elevated eurozone headline inflation.

GBP/USD rose by 0.6% yesterday and is currently flat, trading approximately 1.05% higher than this time last week. Following the BOE's expected rate hold yesterday, the pair reached new 2-year+ highs, extending its outperformance relative to its G10 peers this year. At the meeting, the BOE committed to a gradual approach to easing, pending further evidence of abating price pressures. BOE Governor Bailey stated, "We should be able to reduce rates gradually over time... It's vital that inflation remains low, so we need to be careful not to cut too fast or by too much." Retail sales data outperformed estimates.

USD/CAD declined by 0.35% yesterday and is currently 0.15% higher, trading flat compared to this time last week. July retail sales data exceeded expectations, although a significant portion of the surge was attributed to the recovery of auto sales from June cyber attacks. Core spending in the most interest rate-sensitive and discretionary categories decreased month-over-month. The advance estimate from Statistics Canada for August retail sales indicated gains of 0.5%. GDP data for July is scheduled for release next Friday.

USD/JPY is 1% higher today following the BOJ's dovish rate hold overnight. After hikes in March and July this year, BOJ Governor Ueda indicated that the central bank is not in a hurry to raise rates. Ueda noted that upside risks to inflation from the yen's weakness were easing, providing the BOJ with time to consider its next policy move. The BOJ will need to analyze further US labor market data and the Fed's policy prospects before proceeding with its next rate hike, according to Ueda's comments during the press conference.