Dollar recovers vs yen after hitting an 18-month low: May 3, 2016

Market Review - 02/05/2016 22:30GMT 

Dollar recovers vs yen after hitting an 18-month low

The greenback rebounded against the other major currencies on Monday but gains were limted after data showed that U.S. manufacturing activity expanded at a slower than expected rate in April, adding concerns over the strength of the economy. 

Versus the Japanese yen, although the greenback briefly fell to a fresh 18-month trough at 106.14 in Asia on Monday, price rebounded to 106.75 in Europe before retreating to 106.32. Later, price climbed higher to 106.82 in New York morning and then retreated again to 106.42 after release of poor Markit Manufacturing PMI and ISM Manufacturing PMI. 

Markit research firm said on Monday that U.S. manufacturing PMI reading for April remained unchanged 50.8. Meanwhile, The Institute for Supply Management said on Monday its index of national factory activity slipped to 50.8 last month from a reading of 51.8 in March. A reading above 50 indicates expansion in the manufacturing sector. A gauge of orders received by factories fell 2.5 points to 55.8. 

The single currency continued its ascent against the greenback on Monday. During the day, price rose above Friday's high of 1.1459 to 1.1481 in Asia and then retreated to 1.1448 but only to rise to a fresh 10-month peak at 1.1535 in New York morning before easing. 

The British pound ratcheted higher ahead of Asian open on Monday and then rose to 1.4637 in European morning before easing due to selling in sterling versus euro. Later, price rallied again to a fresh near 2-month peak at 1.4696 in New York morning and then retreated to 1.4645 before moving sideways. 

In other news, Bank of Japan Governor Haruhiko Kuroda said on Monday, 'current yen rises may have adverse impact on Japan's economy; closely watching how recent market moves affect Japan's economy, prices; won't hesitate taking policy action if needed to hit 2 percent inflation target.' 

Swiss National Bank Chairman Thomas Jordan said on Monday, 'overall the Swiss franc remains significantly overvalued despite euro, dollar gains; policy of negative interest and foreign exchange market; interventions helping to stabilise price developments and support economic activity; ECB monetary policy is particularly relevant for Switzerland; SNB continues to take account of exchange rate situation in formulating monetary policy; central banks' role as major economic protagonists not without risks; monetary policy alone cannot remedy all economic ills, especially those of a structural nature; very much in Swiss interest that solutions for structural problems in EU be found, but Switzerland should not simply stand idly by and rely on Europe; SNB will continue to make most of latitude afforded by its monetary sovereignty to respond pragmatically to challenges.' 

Data to be released on Tuesday: 

Australia building approvals, China Caixin manufacturing PMI, Australia RBA interest rate decision, Swiss consumer confidence, U.K. Markit manufacturing PMI, Eurozone producer prices, U.S. ISM New York index, Redbook.