The dollar gained roughly 0.5% against the euro and the broader index of major currencies after a stunning rebound in U.S. August retail sales pushed Treasury yields higher and reinforced the view next week's Fed meeting will keep tapering high on the agenda.
Though the retail sales were marred by hefty downward revisions to July's figures, dollar gains were widespread, reinforced by a September Philly Fed business index nN9N2NL01R that soared over expectations, corroborating Wednesday's far-above-forecast Empire State report.
The data alleviated anxiety about the economy slowing, which arose after weak August non-farm payrolls and below-forecast CPI.
Treasury and dollar gains were tempered somewhat by the fact that the biggest source of retail sales growth was from non-store sales and that services, which are most affected by the pandemic, are not included in the monthly report nL1N2QI1MX.
Initial jobless claims edged higher and continued claims tumbled 187,000, though the data may skewed by seasonally adjustments thrown off by last year's school closures and hurricane Ida.
A hawkish Sept.
21-22 Fed meeting could push EUR/USD toward August's 1.1664 lows nL1N2QI1GM, especially after the euro failed to surpass July's high during this month's rally.
Sterling fell 0.36%, though it held the uptrend line support off the Aug.
27 and Sept.
8 pullback lows by Thursday's 1.3765 low.
That support sits just above the 50% Fibo of the August-July 1.3602-1.3913 recovery at 1.3758.
If Tuesday's 1.3913 recovery high had not been roundly rejected by a cluster of crucial resistance nL1N2QI1T6, Thursday's dollar-led slide would be less imposing.
That bearish rejection places added weight on UK retail sales Friday, the FOMC on Wednesday and Thursday's BOE meeting -- as well as overall risk appetite reflected in global stocks.
USD/JPY was up 0.3%, recovering from Wednesday's intraday breach of weekly chart supports in line with Friday's post-data bounce in Treasury yields.
The 109.83 high on EBS was by the daily kijun and near the middle of September and August's ranges.
The haven yen held up better than most currencies against the dollar's advance due to lingering concerns about the pandemic and supply chains in Asia.
Hot Japanese export growth may also be cooling quickly as a result pandemic disruptions nL4N2QG1AH.
AUD/USD fell 0.56%, with disappointing Australian jobs data nL1N2QI038 kicking off the drop that strong U.S. data extended to its lowest in three weeks.
Worries about China extended the slide in iron ore prices, a problem for Australia's biggest export, and copper fell over 3%, while crude oil consolidated recent gains and nat gas fell 3.25%.
Bitcoin and ethereum were marginally lower, consolidating this week's rebound.
Michigan consumer sentiment for September tops Friday's U.S. data calendar, but Wednesday's Fed meeting is the primary focus.
New economic and rates projections may add some granularity to Fed tapering and rate hike market pricing.
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