Ekonomické zprávy

Asian session review: the US dollar shows positive dynamics

TimeCountryEventPeriodPrevious valueForecastActual
00:30JapanManufacturing PMIApril49.2 49.5
01:00AustraliaMI Inflation Gauge, m/mApril0.3% 0.2%
05:00JapanConsumer ConfidenceApril33.9 35.4

During today's Asian trading, the US dollar rose moderately against major currencies, continuing Friday's increase. However, activity in the FX markets was subdued due to the Labor Day holidays in Singapore, Hong Kong and mainland China.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.21% to 101.87.

The Chinese yuan consolidated against the US dollar, while investors analyzed the PMI data. The National Bureau of Statistics (NBS) said that the manufacturing PMI fell to 49.2 points in April from 51.9 points in March. Economists had expected the index to decline to 51.4 points. The index dropped below 50 points, indicating a reduction in activity in the sector, for the first time since December 2022, which was due to weak global demand and the high-base effect from the quick manufacturing recovery in the first quarter. Meanwhile, the non-manufacturing PMI declined in April to 56.4 points from 58.2 points in March. Still, the latest reading indicated the fourth straight month of expansion in services activity following the removal of pandemic restrictions by Beijing late last year. The data also showed that the composite PMI output index, which measures the change in activity in the manufacturing sector and the service sector, fell to 54.4 points (a 4-month low) from 57.0 points in March (a record high).

The Japanese yen fell another 0.5% against the US dollar. The pressure on the yen continues to come from the results of the latest meeting of the Bank of Japan, which decided to maintain an interest rate of -0.1% on current accounts that financial institutions maintain at the central bank. The Bank of Japan also decided to keep its yield curve control policy unchanged. Meanwhile, the Bank of Japan abandoned its commitment to keep interest rates at "the current level or lower" and said it would "conduct a broad monetary policy review".

The Australian dollar fell by 0.45% against the US dollar, while market participants are preparing for tomorrow's RBA meeting. Economists note that given signs that inflation has already peaked, the RBA is likely to keep rates at 3.6% again at the end of its May meeting.

The Fed and the ECB will also hold meetings this week. According to consensus estimates, both Central Banks will raise their interest rates by 0.25%. However, experts warn that the ECB could surprise with an outsized 0.5% increase.

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