The US dollar rose following a better-than-expected S&P Global services PMI for March at 54.3, compared to an anticipated 50.8. Additional tariffs on autos, lumber, and chips were announced by former President Trump, while Bank of England’s Bailey remarked on business investment delays amid uncertainty.
February’s US national activity index recorded 0.18, an improvement from -0.03 previously. Gold fell by $17 to $3006, while US 10-year yields increased by 8.3 bps to 4.33% and WTI crude oil rose by $0.94 to $69.22.
Yen Weakness And Market Reactions
The yen suffered due to easing recession fears, causing USD/JPY to rise by 138 pips to 150.68. Other currency movements were minor, with the Canadian dollar benefiting from favourable trade comments and oil price increases while USD/CAD decreased by 40 pips within recent ranges.
Upcoming reports include US consumer confidence, new home sales, and the Richmond Fed data.
A stronger-than-expected US services sector reading sent the dollar upwards, reinforcing expectations that economic resilience could extend the need for higher rates. The 54.3 reading for March outpaced the forecasted 50.8, aligning sentiment more closely with growth than contraction. With the latest activity index turning positive at 0.18 in February after January’s negative reading, there is now an additional indication of improving economic momentum.
In response, US bond yields climbed, with 10-year Treasury yields advancing 8.3 basis points to reach 4.33%. That shift came alongside a $17 decline in gold prices, pulling the metal to $3006 as investors adjusted their asset allocations. Oil markets, however, moved in the opposite direction, with WTI crude gaining $0.94, bringing it to $69.22.
Currency markets reflected shifting expectations, particularly in yen trading. Fading concern over an impending US recession helped weaken the Japanese currency further, pushing USD/JPY up by 138 pips to 150.68. The Canadian dollar experienced some support, benefiting from positive trade developments and a rise in crude prices, leading USD/CAD to edge down by 40 pips yet remain within prior boundaries.
Trade Announcements And Economic Data
Elsewhere, political and policy factors are shaping sentiment. Fresh tariff announcements targeting vehicles, lumber, and semiconductors were introduced by Trump, adding a new dimension to trade considerations. Meanwhile, Bailey acknowledged hesitations in business investment decisions, tying them to ongoing uncertainty.
Looking ahead, market attention turns to upcoming releases that include US consumer confidence data, figures on new home sales, and an update on business conditions from the Richmond Fed. Each will provide further clarity on economic trajectory, with traders watching closely for any indications that could refine interest rate expectations.
