Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Up as Investors Digest Surprise Fall in U.S. Manufacturing Data

Published 05/04/2021, 01:12 AM
Updated 05/04/2021, 01:20 AM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – The dollar was up on Tuesday morning in Asia as a surprise slowdown in U.S. manufacturing growth trimmed Investor bets on a booming U.S. economy giving the U.S. currency a boost.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.22% to 91.125 by 13:08 AM ET (5:08 AM GMT).

The USD/JPY pair was up 0.21% to 109.28.

The AUD/USD pair was down 0.21% to 0.7744 and the NZD/USD pair was down 0.33% to 0.7174.

The USD/CNY pair was steady at 6.4735 while the GBP/USD pair was down 0.27% to 1.3872.

Japanese and Chinese markets remained closed for a holiday.

The U.S.’ Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on Monday, was a lower-than-expected 60.7 for April. Shortages of basic materials and transport snarls contributed to the drop, which toppled the dollar from a three-week high against the yen and a two-week high on the euro.

The euro rose 0.3%, as investors digested economic data from the region. The German manufacturing PMI was 66.2 for April, while the Eurozone’s manufacturing PMI was 62.9.

Investors are now looking to further data to be released later in the week including the U.S. trade balance and the April U.S. employment report which includes non-farm payrolls.

Some investors suggested that strong figures might boost the dollar by bringing forward expectations for higher interest rates, while others argued that a strong U.S. economy would weigh on the greenback as imports gain and the trade deficit grows.

"The ISM manufacturing report did not live up to expectations but payrolls should be at least as strong as consensus expectations... the U.S. Federal Reserve's dovish influential core won't have any of it, but expectations for solid U.S. data this week and likely more hawkish regional Fedspeak leave the dollar index positioned for more two-way price action," Westpac analysts said in a note.

Benchmark ten-year U.S. Treasury yields fell 2.5 basis points overnight as the data disappointed, and as New York Fed President John Williams insisted that the economic recovery so far is "not nearly enough" to tighten monetary policy.

Investors also await policy decisions from Norges Bank and the Bank of England on Thursday, while the Reserve Bank of Australia (RBA) kept its interest rate steady at 0.10% when it handed down its decision earlier in the day. Investors are also looking for clues on whether RBA will upgrade economic forecasts that are due on Friday. Meanwhile, the Bank of England could announce a slowdown of its bond purchases when it hands down its policy decision on Thursday.

On the cryptocurrency front, ether extended its record run as it climbed to a new record of $3,457.64 before pulling back slightly.

Latest comments

oopsie!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.