Written by Hannah Lang
NEW YORK (Reuters) – The dollar strengthens on Monday on news that the U.S. manufacturing sector grew in March for the first time since September 2022, while the yen loses $1 on threats of intervention by the Bank of Japan. = remained below 152 yen.
The Institute for Supply Management (ISM) said that while U.S. manufacturing production has recovered and new orders have increased, factory employment remains low and raw material prices have risen.
The recovery ended 16 consecutive months of contraction in the manufacturing industry, which accounts for 10.4% of the economy. This was the longest period of contraction since August 2000 to January 2002.
The dollar index, which measures the value of the US currency against six rival currencies, rose 0.507% to 105.01.
“The ISM information is really leading and just shows that inflation isn’t always going down. The market is reacting to that quite a bit,” said Eugene Epstein, head of North American structures at Moneycorp. I think so.”
Markets on Monday cut bets that the Fed will cut interest rates in June, after Friday’s news of U.S. price easing boosted odds, according to the CME FedWatch tool.
The Commerce Department’s Bureau of Economic Analysis reported on Friday that the personal consumption expenditure (PCE) price index rose 0.3% in February, compared with a 0.4% rise expected by economists polled by Reuters.
“I don’t think this, combined with Friday’s PCE data, will materially change the Fed’s calculations, but the market is once again starting to move a little more in line with the Fed’s own expectations that it will cut rates more often this year and when. ” said Helen Given, currency trader at Monex USA.
Federal Reserve Chairman Jerome Powell said Friday that the latest U.S. inflation numbers are “in line with what we would expect,” affirming his comments after last month’s Fed policy meeting.
Currency market attention has been focused on the yen as the currency strengthens toward 1990 levels, again raising the risk of intervention by Japanese authorities.
The yen hit a 34-year low of 151.975 yen against the dollar on Wednesday, and last traded at 151.635 yen to the dollar on Monday.
The Bank of Japan intervened in September and October 2022 as the yen fell toward a 32-year low of 152 yen to the dollar.
Japan’s plans for the yen remain difficult to predict. With the fiscal year over, the Bank of Japan does not need to worry about sudden fluctuations in the yen affecting its balance sheet.
However, news of last week’s emergency meeting of Japan’s three financial authorities, the Ministry of Finance (MOF), the Bank of Japan, and the Financial Services Agency, as well as comments from officials, have so far kept the yen above its 34-year low. There is.
Finance Minister Shunichi Suzuki on Monday reiterated his warning against sudden movements in the yen, saying he was not ruling out options for excessive currency fluctuations and would respond appropriately.
The Chinese yuan on Monday remained under pressure against the dollar, even as the latest China statistics suggested the economic recovery was gaining momentum and the yuan was stabilizing thanks to the People’s Bank of China’s sustained efforts. It fell. [CNY/]
The offshore yuan last traded at 7.2604 yuan to the dollar.
Among other currencies, the euro was trading 0.48% lower on the day at $1.0738, and the pound was trading 0.63% lower on the day at $1.25440.
Among virtual currencies, Bitcoin last fell 1.07% to $68,906. Ether fell 1.61% to $3,441.90.
(Reporting by Hannah Lang in New York; Additional reporting by Uncle Banerjee in Singapore; Editing by Christopher Cushing, Barbara Lewis and Richard Chan)
