North American Summary and Highlights 1 Apr
Overview - The USD advanced with UST yields on stronger ISM manufacturing data.
North American session
The USD opened slightly stronger in response to rising UST yields. Friday’s data had seen February’s core PCE price data come in at 0.2615% before rounding, subdued enough for Fed’s Powell to subsequently welcome the data, though he went on to say that the Fed is no hurry to ease. Overnight Japanese data saw the Q1 Tankan report little changed for manufacturing but with some improvement in services.
Gains in the USD accelerated after March’s ISM manufacturing index bounced to above neutral to 50.3 from 47.8 with prices paid also stronger at 55.8 from 52.5, both the highest since 2022. UST yields advanced by around 10bps across the curve, even with February construction spending falling by 0.3%, a second straight dip to follow 12 straight gains. USD/JPY rose to 151.65 and EUR/USD fell to 1.0740, after opening near 151.25 and 1.08 respectively.
The Bank of Canada’s Q1 business outlook survey showed some easing in inflation expectations though most respondents continue to see inflation above target. The CAD saw no reaction but reflected the generally firmer USD tone, though CAD did outperform the AUD with AUD/CAD dipping to near .88. GBP underperformed as EUR/GBP rose to .8560.