The Dollar Has Increased After Low Rate Bets

(CTN News) – On Monday, the US Dollar (USD) rose after data showed the manufacturing sector grew in March for the first time since September 2022, but the yen remained below 152 per dollar, keeping traders on edge.

Despite a slowdown in employment at factories and higher input costs, U.S. manufacturing grew for the first time in one and a half years in March, according to ISM.

In manufacturing, which accounts for 10.4% of the economy, the rebound ended 16 straight months of contraction. In the period between August 2000 and January 2002, the economy shrank the longest.

Compared to six rival currencies, its dollar index was 0.469% higher at 104.97.

A reading on Friday showed easing U.S. prices, spurring markets to lower their bets on the Fed cutting rates in June, according to CME FedWatch.

In February, the personal consumption expenditures (PCE) price index rose 0.3%, versus the 0.4% rise predicted by Reuters economists.

It is unlikely that this will alter the Federal Reserve’s calculations in conjunction with Friday’s PCE data, but as Helen Given, a Monex USA currency trader, pointed out, markets are once again moving in line with the Fed’s own expectations for this year’s rate cuts.

The latest U.S. inflation data was “in line with what we would like to see,” as Powell said after last month’s policy meeting.

Inflation well above 2% while still considering rate cuts is supporting risk assets, according to Bank of Singapore chief economist Mansoor Mohi-uddin.
Yen has been in the spotlight as its move toward levels last seen in 1990 revives the risk that Japanese authorities will intervene.

On Wednesday, the yen touched its lowest level against the dollar in 34 years at 151.975 and was last at 151.745 per dollar on Monday.

After the yen plunged to a 32-year low of 152 to the dollar in 2022, Japan intervened in the currency market.

Predicting Japan’s yen plans remains difficult. The Bank of Japan has already completed its fiscal year, so sudden yen movements will not impact its balance sheets.

The yen has so far held above 34-year lows following last week’s emergency meeting of the three monetary authorities – the Ministry of Finance (MOF), BOJ and Financial Services Agency.

Reiterating his warning against rapid moves in the yen, finance minister Shunichi Suzuki said on Monday he wouldn’t rule out alternatives to excessive currency movements.

While recent Chinese data suggested the economy had gained traction, the yuan weakened on Monday, pressured by the dollar.

Dollars were last traded at 7.2592 offshore yuan.

Sterling was last at $1.25660, down 0.45% on the day, while the euro was down 0.44% at $1.0742.

Cryptocurrencies lost 0.79% last week, with bitcoin reaching $69,097. The price of ether was up 0.59% at $3,518.90.

SEE ALSO:

In 2023, Trump Media Lost $58 Million, A Net Loss Of More Than 25%