USD

At 10 a.m. EST, the ISM manufacturing PMI report was released and increased slightly to 47.1 in April from 46.8 estimated. In addition, the Prices Paid sub-index, which reflects business sentiment around future inflation, rose to 53.2 from 49.2 for April. With the headline number better than anticipated, it bolsters market expectations for a 25-basis points Fed rate hike move this coming Wednesday. Such a result could boost US Treasury yields and support the Dollar. In addition, investors will keep an eye on broader market sentiment as we approach Wednesday’s highly anticipated monetary policy decision from the Fed. 

EUR

The Labour Day long weekend has led to quiet trading in the European session. EUR/USD briefly dipped below 1.10 but has since reclaimed the level as investors await US manufacturing numbers. The pair seems set for a quiet day with no EU data on deck; traders will await word from the Fed and ECB later this week. Markets are pricing in 25 basis-point hikes from both banks, although some ECB council members have left the door open for a 50-basis point hike which could provide the Euro enough fuel to retest the 1.11 mark.   

GBP

Like the Euro, the UK holiday is expected to keep GBP/USD moves relatively muted. The pair is down for the day to start the US session but has held the 1.25 level so far after reaching 11-month highs last Friday. Despite starting the week in the red, the expected divergence between the Bank of England and Federal Reserve policy could continue to support the Sterling in the short term. 

JPY

USD/JPY surged 1.73% on Friday on the backs of a high US CPI reading combined with a dovish BoJ and is on the rise again to kick off May. Overnight data showed a slight increase in the purchasing managers’ index for Japanese manufacturing in April and a modest improvement in household confidence during the month.

CAD

A retreat in oil prices and a stronger USD has the Loonie on the back foot to start the week. Canadian manufacturing was released at 9:30 a.m. EST, just before its US counterpart at 50.2 versus 50.5 expected. The pair spiked as high as 1.3583 in early trading but has cooled slightly ahead of the data releases.

MXN

Peso opens the US session slightly stronger, trading around 17.95 against the Dollar. A quiet day is expected on the news front for the Peso as Mexican financial markets shutter for Labour Day. The US Dollar’s reaction to manufacturing numbers or oil price fluctuations will likely drive any movement. 

BRL

 

The Real continues the fight to stay below 5.00 against the greenback as markets brace for the Fed and the Central Bank of Brazil’s decisions on interest rates this Wednesday.

 

CNY

In April, China’s official NBS Manufacturing PMI surprisingly dropped to 49.2, the lowest in four months, indicating the first decrease in factory activity since December 2022. This drop was caused by a decline in global demand, reducing output, new orders, buying activity, and export sales. Additionally, employment declined for the second month in a row.  Although input costs decreased, output charges fell for the second month, the sharpest decline since August of the previous year. The news has hurt the Yuan, down around 25 basis points versus the Dollar early Monday morning.