Last week’s ECB Council meeting was fully factored in for a 0.25% rate cut.

Rather, the focus was on what President Lagarde would say in her press conference regarding the pace of future rate cuts, etc.

The Trump-Harris debate was uneventful, but the winner of the debate was Harris, as Taylor Swift came out in support of Harris after the debate. In her speech, Bank of Japan Council Member Junko Nakayama repeated the Bank of Japan’s previous phrase: “If the economic and price outlook is to be realized, we will adjust the degree of monetary accommodation.” This made it surprising that USD/JPY hit a new low at this stage before the US CPI release; we are also in the blackout period before the FOMC meeting, and there should have been no statement from Fed officials. This is why there was not much to report.

Before the September FOMC meeting, there was a 50% chance of a 0.25% or 0.5% rate cut, but now there is a 75% chance of a 0.25% rate cut. Although the employment report was lower than expected, it was not bad enough to warrant a 0.5% rate cut.
The conclusion may be that the employment data was not bad enough to warrant a 0.5% rate cut.

The WSJ’s Nick Timiraos published an article around 2:00 a.m. today that said the Fed was undecided between a 0.25% or 0.5% rate cut, and the possibility of a 0.5% rate cut was surprisingly large, which sold the dollar against the yen.
However, objectively speaking, a 0.5% rate cut is still not a real possibility. The market may have already factored in half of the 0.5%, and if the 0.25% rate cut comes as expected, the dollar is likely to rebound. The dollar is still very heavy, probably because the euro and the pound have not moved, and we would like to see a return to a selling stance.