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Manufacturing strength sends the US dollar higher

USD

The economic data from the United States might not all have been better than those from Europe but they were good enough to keep the USD ahead of the EUR. The dollar made fairly steady upward progress through the New York day and held onto its gains overnight.

The biggest problem was US retail sales. They fell 0.2% in February, contrary to analysts' predictions of a 0.3% increase. Excluding autos the decline was 0.4%, the exact opposite of the promised 0.4% increase. There was a dichotomy too between the purchasing managers' index readings. The one from Markit was down by more than half a point at 52.4, its lowest level since June 2017. ISM's version improved by more than a point to 55.3. Fortunately for the dollar, investors attach more importance to the ISM version. A 1.0% increase in construction spending did not have much impact.

EUR

The euro zone added almost nothing to the data debate this morning. Producer prices increased 0.1% in February, in line with forecast. They were up by 3.0% from a year earlier, almost as much as the predicted 3.1%. Markets do not care much about producer prices.

With nothing else to go on, investors continued to fret about yesterday morning's disappointing figures. The EUR is down by 0.4% against the USD.

CAD

The sole Canadian statistic was the manufacturing sector PMI. It was two points lower on the month, just squeezing into the above-50 growth zone at 50.5. Markit said it was the "slowest improvement in manufacturing conditions in two and a half years", with export orders "falling at the fastest rate since February 2015".

Luckily for the CAD, oil had a good day. WTI crude went up by 1.9% to $61.88. The rising oil price offset any reservations investors may have had about the discouraging PMI. There was a tiny but positive 0.1% increase in the value of the Loonie against the USD.

GBP

The fruitless Brexit battle continued to exasperate investors. Yesterday's exercise involved another round of "indicative" votes by members of parliament, on possible ways around the legislative gridlock. Four alternatives were put forward and all failed to win approval by the House of Commons. Of the four, the most votes went to a proposal calling for a "confirmatory vote" (don't call it a referendum) on whatever deal or no-deal eventually emerges.

News of the results sent the GBP lower. It had to give back all the gains it had made earlier in the day following the stronger-than-expected manufacturing PMI. The pound is down by 0.4% on the day and this morning's 49.7 construction PMI did not make much difference to the outcome.

JPY

It is several decades since investors cared about money supply. Nevertheless, the only statistic from Japan overnight was for the monetary base, otherwise known as money supply M0. It increased by 3.8% in the year to March, a little less than analysts had forecast.

The main - the only - driver of the value of the JPY against the USD was the ISM purchasing managers' index. It sent the dollar higher and the JPY showed no sign of making back the deficit. It is 0.3% lower on the day.

USD: ISM's manufacturing PMI carries the day

USD: ISM's manufacturing PMI carries the day

EUR: No relief from Monday's disappointing data

EUR: No relief from Monday's disappointing data

CAD: Higher oil neutralizes slower manufacturing growth

CAD: Higher oil neutralizes slower manufacturing growth

GBP: Another day, another Brexit vote, another letdown

GBP: Another day, another Brexit vote, another letdown

JPY: Left behind by the US dollar

JPY: Left behind by the US dollar

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