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March saw U.S. manufacturers struggle to cope with surging inflows of new orders

USD

The Dollar index, which tracks the greenback against a basket of major currencies, slid 0.36% on Thursday. Disappointing numbers from the labor market were the major catalyst. Initial claims rose from 658K to 719K, well above the consensus of 675K and remaining above pre-pandemic levels. However, a solid sustained sharp decline is expected in the second quarter as the economy reopens. Long bond yields also fell on the back of those numbers. In stark contrast, March manufacturing PMI indicated the second-strongest improvement in the health of the U.S. manufacturing sector since data collection began in May 2007. The index rose to 59.1 in March, up from 58.6 in February due to a soaring demand backed by the arrival of stimulus cheques. Markets will be closed today due to the national holiday Good Friday.

EUR

Unexpectedly, the Manufacturing PMI showed Eurozone factories were seeing their fastest pace in growth in a nearly 24-year history. The index came at 62.5 in March, from 57.9 in February, trivially above the consensus and first estimate, 62.4. The survey also highlighted that although centered on Germany, which saw a particularly strong record expansion during the month, the improving trend is broad-based across the region as factories benefit from rising domestic demand and resurgent export growth. Against this backdrop, the single currency rose 0.42% against the greenback on Thursday. Markets will be closed today due to the national holiday Good Friday.

GBP

The British Pound printed gains (+0.34%) against the U.S. dollar on Thursday as the manufacturing PMI jumped to 58.9 in March, from 55.1 in February, above the consensus and the flash estimate, 57.9. The index highlighted that the domestic market remained the prime source of new orders, as companies reported that the vaccine roll-out and clients’ preparations for the loosening of lockdown restrictions underpinned the expansion. Looking ahead, markets are expecting that the Pound continues to outperform its peers through the next quarter as the fundamental economic data is still coming in matching the strong expectations. Markets will be closed today due to the national holiday Good Friday.

JPY

The Japanese yen rose 0.12% against the U.S. dollar after manufacturing PMI data reported a surge of strong factory activity. The index jumped from 51.4 in February to 52.7 in March, signaling the strongest improvement in the health of the sector since October 2018 and reflecting a sustained recovery from the impact of the pandemic. Japan’s currency also traded higher as the U.S. bond yield eased. Earlier today, Asian markets were trading at positive territory in a holiday-lightened trading session.

CAD

Upbeat economic notes, alongside higher oil prices, provided support to the Canadian Dollar on Thursday. The Loonie rose 0.14% against its rival U.S. dollar after the manufacturing PMI registered 58.5 in March, up considerably from 54.8 in February, to become the highest reading in over ten years of data collection. The growth was driven by stronger demand as Covid-19 restrictions continue to ease across the country. Future oil prices were up 3.8% at $61.45/barrel after OPEC+ members decided to gradually curb oil production cuts beginning in May. Markets will be closed today due to the national holiday Good Friday.

MXN

In a light and quiet trading session due to the national holiday, the Mexican Peso edged up 0.7%, touching a two-week high against the greenback. Upbeat headlines from the latest OPEC+ meeting were the major driver. The alliance decided to gradually curb oil production cuts beginning in May as the ongoing Covid-19 crisis continues to cloud the outlook for the remainder of the year. Markets will be closed today due to the national holiday Good Friday.

CNY

The Chinese yuan slid 0.2% and touched a four-month low against the greenback on Thursday. Investors and traders continued to digest the recent Caixin manufacturing PMI, which slipped to 50.6 in March, from 50.9 in February, below the consensus, 51.4. However, an aggressive Covid-19 vaccine rollout, along with bets that the new fiscal stimulus in the U.S. would lead to foster economic growth and keep the U.S. dollar trading higher, weighed on the CNY. Today, the CNY is recovering some of its strength against the US dollar in the Asian trading session amid a thin volume owing to the Easter holiday weekend.

BRL

Worse-than-expected economic data hit the Brazilian Real hard, which gave back gains from the day before. The BRL weakened 1.37% against the U.S. dollar as industrial production fell in February for the first time in 10 months, an unexpected contraction that put additional pressure on the currency. Furthermore, the manufacturing PMI also showed that the manufacturing sector experienced a setback in March, with new orders and output dipping back into contraction due to a spike in Covid-19 cases and the introduction of new controls aimed at curbing the spread of the disease. Today, markets are closed due to the national holiday Good Friday.

Quick Insights

USD: Disappointing numbers from the labor market

USD: Disappointing numbers from the labor market

EUR: The eurozone’s manufacturing economy performed extremely strongly during the month of March

EUR: The eurozone’s manufacturing economy performed extremely strongly during the month of March

GBP: The fundamental economic data is still coming in matching the strong expectations

GBP: The fundamental economic data is still coming in matching the strong expectations

JPY: Bond Yields ease and JPY shows some progress

JPY: Bond Yields ease and JPY shows some progress

CAD: Upbeat economic notes, alongside higher oil prices provide some support

CAD: Upbeat economic notes, alongside higher oil prices provide some support

MXN: Upbeat headlines from the latest OPEC+ meeting help the MXN

MXN: Upbeat headlines from the latest OPEC+ meeting help the MXN

CNY: The Chinese yuan slid and touch a four-month low

CNY: The Chinese yuan slid and touch a four-month low

BRL: Unexpected industrial production contraction puts additional pressure on the currency

BRL: Unexpected industrial production contraction puts additional pressure on the currency

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