The US dollar has lost another 0.5% against most of the major currencies today, as Asia and Europe respond to the Fed's decision.  There are few exceptions to this generalization.  The Norwegian krone has gained nearly three times as much, with the help of its central bank, which has played down for lower rates at today's meeting.  The euro is at its lowest level against Nokkie since the end of last year. 

The US dollar, which finished last week on a firm note, is under pressure to start the new week that features Bank of Japan and Federal Reserve meetings.  The slighter stronger August CPI reading helped lift the greenback ahead of the weekend, but investors continue to see a low probability of a Fed hike this week. 

Yellow lights are flashing.  Bonds remain heavy despite a weak spate of data that would seem to remove nearly any chance that Fed will hike rates next week.  The implications of the disappointing retail sales data indicates that estimates for Q3 GDP will be revised lower. 

This quarter does not seem to be the breakout that had appeared to be the case previously.  The output from industrial sector, which accounts for a little less than GDP fell in August, and the July gains were shaved in revision.  

Looking at the diary, today is the most important day of the week. The Bank of England and the Swiss National Bank meet.  The UK reports retail sales.  EMU reports CPI figures.  The US reports retail sales, industrial output, and two September Fed surveys.  Yet the economic updates are unlikely change sentiment ahead of next week FOMC and BOJ meetings.

The markets are trying to catch their collective breath after yesterday's dramatic moves.  The sharp slide in US equities may have weighed on Asian markets, but losses are mild. Still, the MSCI Asia-Pacific Index was off 0.8%, the fifth consecutive losing session. European bourses are slightly firmer, but appear to be awaiting the US open for stronger directional cues.   

Stocks and bonds have begun the new week much like last week ended.  Sharp losses are being recorded.  The US dollar is mixed, with minor losses against the euro, yen, and sterling, but a firmer tone is evident against the dollar-bloc and emerging market currencies. 

The week ahead will likely be shaped by a combination of what happened last week and what will happen the week after next.  The end of last week saw a sell-off in equities and bonds and a recovery in the US dollar. The week after next the FOMC and BOJ meet in apparently live meetings, meaning that policies may be adjusted.  

The US dollar is lower against all the major currencies this week as North American participants close it out.  On the day, the dollar is consolidating swings yesterday and is narrowly mixed.  Bond yields are higher and equities are mostly lower.

The euro has finished lower the last three Fridays.  The streak may end today.  The euro has found support nearly $1.1260, and the intraday technicals favor a move higher in the US morning. 

Disappointing industrial output figures from Germany and UK are helping stabilize the US dollar after yesterday's shellacking.  Investors have been fickle about the prospects for a rate hike this month, and the unexpected dramatic slide in the service spurred a downgrading of such expectations, and a flight out of the dollar.  It was not simply a quest for yields, though that was part of it.  Surely, the yen and euro's strength is not a function of superior yields than the US. 

The US dollar is trading heavily against most of the major and emerging market currencies. However, the losses are modest, and the greenback remains within recent ranges.  The Antipodean and Scandi bloc currencies are performing best. 

Several developments took place while US markets were closed for its Labor Day holiday.  Most of the economic news was favorable.  This included a strong snap back in the UK service PMI,  more evidence that the moral suasion campaign to lift wages in Japan is yielding some success and a rise in the Caixin's  China's service PMI. 

The US dollar showed an unexpected resiliency to the disappointing August employment data.  The dollar's resilience in the face of the jobs data may reflect that many see the report did not alter investors' or policymakers' information set.  It did not sway opinion very much for or against a move.  There is not much market-moving data from the US next week outside of the ISM non-manufacturing report.

The US grew 151k jobs last month and when coupled with the 20k upward revision to the July figure the net job creation is not far from the 170k-180k median expectation. 

However, the details were more disappointing.  Average hourly earnings rose 0.1%.  The 2.4% year-over-year increase compares with a revised 2.7% (from 2.6%) in July and is the weakest pace since March.

The US dollar is little changed ahead of the job report.  Our near-term bias is for a lower dollar.   Sterling is flat and is holding on to about a 1% gain this week.  The Japanese yen is about a 0.3% lower and is off 1.7% this week.  The euro was coming into today for the week.

The US dollar is a little softer against most of the major and emerging market currencies.  The exception is the Japanese yen, where the greenback has moved above JPY103 for the first time in a month.  The tone is consolidative as the market awaits assurances that the jobs growth this month has been sufficiently strong as to keep the prospects of a September meeting still alive.