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With some major markets closed on Easter Monday, the US dollar is the clear winner as of late Monday. As the day began, most attention was on growth-related data, with China releasing positive manufacturing production data for March. Still, the news was insufficient to keep investors upbeat.
The news on Friday that US inflation, as determined by the Personal Consumption Expenditures (PCE) Price Index, remained at 2.8% YoY in February was priced in by the financial markets. Chairman of the Federal Reserve (Fed), Jerome Powell, stated after the report that the Fed is not in a rush to raise rates because of the robust economy and persistently rising inflation.
European Central Bank (ECB) representatives made hawkish remarks over the weekend, which did little to improve the atmosphere. Robert Holzmann, the governor of the Austrian Central Bank, stated on Sunday that the ECB may lower interest rates before the US Federal Reserve. According to Holzmann, the ECB’s decision-making timeline “will depend largely on what wage and price developments look like by June.” Additionally, Governor Yannis Stournaras of the Bank of Greece proposed a number of rate reductions for this year, stating that it is “possible” to lower rates by 25 basis points (bps) four times.
Near the February low of 1.0694, EUR/USD ended at about 1.0740. USD/CHF is comfortably above 0.9040, while GBP/USD is trading at 1.2545. Commodity-linked currencies declined in tandem with US indexes; USD/CAD reached 1.3580 while AUD/USD hovered around 0.6480. At last, the USD/JPY exchange rate is 151.60. Gold soared to $2,265 a troy ounce, a record high, before pulling back towards $2,240 mid-US afternoon.
Economic Data
Following the release of a significantly better-than-expected US ISM Manufacturing PMI, the US dollar gained strength. The manufacturing sector’s economic activity increased in March, the study revealed, following 16 months of contraction. The index increased to 50.3 in March from 47.8 in February. Concurrently, S&P Global disclosed its Manufacturing PMI final estimate, which was verified at 51.9, indicating a decrease from the anticipated 52.5 but maintaining expansionary levels.
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