Dollar Holds onto Massive Gains

The US dollar demonstrated huge gains today, mostly with help from the European Central Bank policy decision, but also due to the string of positive domestic economic indicators that supported the outlook for monetary tightening from the Federal Reserve.
The major driver for the Forex market today was the ECB decision. While all major currencies rallied against the euro, the dollar profited the most from the resulting risk aversion.
News from the USA itself was also supportive for the greenback. The majority of economic reports were better than analysts’ expectations, most notably the services Purchasing Managers’ Index of Institute for Supply Management that demonstrated an increase from 58.7 percent to 59.6 percent last month instead of falling to 57.3 percent as was forecast. The exception among better-than-expected indicators was the employment data that demonstrated unexpected slowdown of employment growth. Nonfarm payrolls will be released tomorrow, and they may add to tightening expectations in case they come out good enough.
EUR/USD tumbled from 1.3150 to 1.2927 as of 23:45 GMT today, trading near the lowest level since July 10. GBP/USD dipped from 1.6461 to 1.6291 — the lowest rate since February 6. USD/JPY soared from 104.79 to 105.65 — the strongest level since October 2008.

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