The dollar index rallied to an 11-week high at 92.45, after U.S. ADP and home sales data came in above Reuters consensus, the upbeat data indicating the U.S. recovery may be further along than other countries.
Though the Fed continues to cling to its transitory inflation narrative, additional forecast-beating U.S. data, in particular Friday’s non-farm payrolls and earnings data may bring policymakers' views on asset purchase tapering and rate hikes more in-line with market expectations.
EUR/USD slipped to a 10-month low at 1.1845 just ahead of Fibo support by 1.1837, which has been tested, but held several times over the last three weeks.
Euribor futures indicating the ECB is well behind the Fed on rate hike expectations are helping to keep EUR/USD on the offer.
USD/JPY rallied to 111.12, a pip higher than its previous 2021 high, on the strength of the ADP data.
Diverging U.S.-Japan rate expectations put March 2020 highs by 111.72 in focus.
GBP rallied versus the euro after the “sausage war” ceasefire, but the pound remained weak versus the USD, slipping to 1.3799 as U.S. growth prospects and COVID Delta variant fears weighed on GBP/USD.
Commodities gained, oil rallied 0.78%, and copper rose 0.36%.
However, the growing chasm in growth expectations globally, aided by rising COVID cases in Europe and Asia weighed on AUD, NZD and CAD.
Bitcoin and ether slipped 4% and 1.5% respectively, well below 2021 highs but still holding nice gains year-to-date.
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