US Dollar stays on the back foot ahead of mid-tier data

Following the rebound witnessed at the beginning of the week, the US Dollar Index turned south on disappointing ISM Manufacturing PMI data and closed deep in negative territory on Monday. The index extends its slide in the early European session despite the cautious market mood. JOLTS Job Opening and Factory Orders data for March will be featured in the US economic docket. Investors will also keep a close eye on comments from central bank officials.

The ISM’s monthly survey revealed on Monday that the business activity in the US manufacturing sector continued to contract at an accelerating pace in March. The Price Paid sub-index also dropped below 50, revealing a decline in input inflation. After this report, the US Dollar came under renewed bearish pressure and the benchmark 10-year US Treasury bond yield dropped below 3.5%. On Tuesday, the US Dollar Index stays at lowest level in two months below 102.00 and the 10-year yield fluctuates slightly above 3.4%. Meanwhile, US stock index futures trade modestly lower, pointing to a cautious market stance.

During the Asian trading hours, the Reserve Bank of Australia (RBA) announced that it left the policy rate unchanged at 3.6% as expected. In its policy statement, the RBA noted that it expects some further tightening of monetary policy may well be needed. Following Monday’s impressive rally, AUD/USD lost its traction after the RBA event and was last seen losing nearly 0.5% on the day at 0.6750.

After having stayed in a consoldation phase near $80 for the majority of the day on Monday, the barrel of West Texas Intermediate started to edge higher on Tuesday and was last seen rising 1% on the day at $81.15. The Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) confirmed on Monday that voluntary oil production cuts will amount to 1.66 million barrels per day.

Although EUR/USD retreated slightly after having climbed above 1.0900 on Monday, it seems to have regained its traction early Tuesday. As of writing, the pair was trading at its highest level since early February at around 1.0930. European Central Bank (ECB) policymaker Mario Centeno is scheduled to speak later in the day.

GBP/USD has gathered bullish momentum and reached its highest level since June 2022 above 1.2450 on Tuesday. Bank of England policymaker Silvana Tenreyro and Chief Economist Huw Pill will be delivering speeches.

USD/JPY closed in negative territory on Monday but managed to stage a rebound early Tuesday. The pair was last seen rising 0.2% on the day at 132.70.

Gold price capitalized on falling US T-bond yields and climbed above $1,980 on Monday. XAU/USD seems to have gone into a consolidation phase early Tuesday near that level.

Bitcoin extended its downward correction on Monday but managed to shake off the bearish pressure. At the time of press, BTC/USD was trading modestly higher on the day at $28,000. Ethereum registered small losses on Monday but failed to make a decisive move. ETH/USD stays relatively calm slightly above $1,800 early Tuesday.

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