Apr 1 2024: The dollar experienced a boost after data revealed growth in the U.S. manufacturing sector in March, marking its first expansion since September 2022. This development, coupled with the yen’s stability below 152 per dollar, kept traders vigilant regarding potential intervention measures.
The Institute for Supply Management (ISM) reported that U.S. manufacturing grew for the first time in 18 months in March, driven by increased production and new orders. However, employment in the sector remained subdued, and input prices saw an uptick.
This rebound in manufacturing ended a streak of 16 months of contraction, a period not seen since August 2000 to January 2002, and is significant as manufacturing constitutes 10.4% of the economy.
The dollar index, gauging the dollar against six major currencies, climbed by 0.469% to reach 104.97.
Market sentiments on Monday shifted as bets on the Federal Reserve cutting rates in June decreased. This change followed a previous increase in odds spurred by easing U.S. prices, as indicated by the CME FedWatch tool.
The Personal Consumption Expenditures (PCE) price index for February, released by the Commerce Department’s Bureau of Economic Analysis, showed a 0.3% rise, slightly lower than economists’ forecast of 0.4%.
Helen Given, an FX trader at Monex USA, commented that while the PCE data might not significantly alter the Fed’s decision-making, markets are aligning more closely with the Fed’s rate cut expectations.
Federal Reserve Chair Jerome Powell’s recent remarks echoed this sentiment, stating that the latest inflation data aligns with the Fed’s objectives.
The yen’s movement, nearing levels last seen in 1990, has drawn attention to potential Japanese intervention in the currency market. Japan intervened in 2022 when the yen approached a 32-year low against the dollar.
Finance Minister Shunichi Suzuki indicated Japan’s readiness to act against excessive currency movements, maintaining vigilance amid ongoing market volatility.
China’s yuan weakened against the dollar, influenced by broader currency movements despite positive Chinese economic indicators and efforts by the central bank to stabilize the currency.
In the cryptocurrency market, bitcoin saw a slight decline to $69,097, while ether experienced a modest increase, reaching $3,518.90.
