Dollar gains vs G3 counterparts on rising US yields

The greenback ended the day higher against G3 currencies on rally in U.S. treasury yields but weakened versus the risky commodity currencies. Investors remained cautious ahead of the release of key U.S. jobs report on Friday.  
  
On the data front, Reuters reported U.S. services industry activity nudged up in September, but growth is being restrained by a persistent shortage of inputs and the resulting high prices as the pandemic drags on.    The Institute for Supply Management said on Tuesday its non-manufacturing activity index edged up to a reading of 61.9 last month from 61.7 in August. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity.    And the Economists polled  had forecast the index falling to 60. A resurgence in COVID-19 infections, driven by the Delta variant, has delayed an anticipated upswing in demand for services like travel and other high-contact activities.  
  
Versus the Japanese yen, dollar found renewed buying at 110.88 at Asian open and climbed to 111.25 in early European morning. The pair then ratcheted higher to session highs of 111.35 in New York morning on active cross-selling in jpy due to the return of risk-sentiment on rally in U.S. yields before easing on profit taking.  
  
The single currency remained under pressure in Asian morning and fell to 1.1591 ahead of European open due partly to cross-selling in euro especially vs sterling. Although price hit sessin lows of 1.1581 in New York morning, short covering layet lifted the pair to 1.1613 before retreating.  
  
The British pound also came under selling pressure and fell to 1.3485 in Asian morning, however, price cregained traction and climbed steadily higher to session highs of 1.3647 in New York morning on active cross-buying in sterling.  
  
Further news from Reuters on Britain's post-lockdown economic recovery avoided losing further momentum in September but companies increased prices at the fastest pace on record, adding to signs of rising inflation, a survey showed on Tuesday.   
The final reading of the IHS Markit/CIPS composite Purchasing Managers' Index (PMI), which combines Britain's services and manufacturing sectors, edged up to 54.9 from 54.8 in August, the first time it did not fall since May.  
  
In other news by Reuters, Chicago Federal Reserve Bank President Charles Evans on Tuesday said he continues to believe supply bottlenecks are driving most of the recent increase in inflation, and though it is higher and may last longer than initially thought, it will subside.     Inflation expected to be 3.5% or 4% this year "cuts into income, wages and so that's a problem and we are definitely monitoring that, but it's not really a monetary policy issue, it's a infrastructure, supply issue at the moment," Evans said in an interview with CNBC. He also repeated his view, in line with most other Fed policymakers, that the U.S. central bank is close to the time it will begin reducing its monthly asset purchases, and would not be surprised if the taper is complete by mid-2022 or the fall.  
  
Data to be released on Wednesday :  
  
China market holiday, New Zealand RBNZ interest rate decision, Germany industrial orders, U.K. Markit construction PMI, EU retail sales, U.S. MBA mortgage application and ADP employment change.