European FX Open - Dudley sparks USD losses

The USD lost broadly overnight as ex Fed official Dudley said he sees a case for the more aggressive -50 basis points rate cut on Wednesday.

Meanwhile, HSBC raised its YEN forecasts on the view that it is regaining its 'safe haven' characteristics and that the Fed is pivoting to a rate cut cycle.

The UK/multinational giant revised its USD YEN estimates to 142 and 138 for Q4 and Q2 2025 from 148 and 144 respectively.

And, Bbg write some hedge funds are adding bullish YEN bets in the options market on expectations it will extend its rally. Signs that the BOJ is intent on raising interest rates further this cycle, possibly before year-end, has made the YEN the world's top performer in Q3 so far.

USD/YEN made a marginal new range low of 140.65 overnight and the increasing focus is a possible sub-140 move before that FOMC verdict.

To come, French final August CPI and the BOE/Ipsos UK inflation next 12 months survey.

In the second half, focus will turn to September's preliminary Michigan sentiment and those long-term inflation expectations.

There is multi-ECB speak after yesterday's expected cuts, including Lagarde again.

Elsewhere, US stock futures are all small in the green at the time of writing, while gold has hit a new record high of Usd 2570.3.

On the US presidential election front, Trump ruled out more debates with Kamala Harris and pledged to nix taxes on overtime pay and a Reuters/Ipsos poll conducted after the Tuesday night's TV contest showed Harris marginally expanding her lead to 47% against Trump’s 42%.

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