The US dollar made further gains against sterling yesterday on the back of some strong data releases. Expectations of a US interest rate hike by December have also increased to more than 71% from 42% just one month ago. The greenback has rallied by more than 3% over the last month or so. Expectations of a rate hike are in contrast to the eurozone, as the ECB are yet to provide any concrete indications that it will scale back its policy stimulus.
Global shares climbed to a record high on Tuesday after Monday’s measure of September’s US manufacturing activity showed a 13-year high. In addition, ADP non-farm employment is released today and is generally a good precursor for the main non-farm payroll data at the end of the week. We also have ISM Non-manufacturing PMI data out, which will be watched closely to see if it continues in the same mould as the manufacturing data earlier in the week.