The greenback surrendered its initial gains and fell in New York to end the day lower against its peers due to a drop in U.S. Treasury yields following weak ISM manufacturing PMI in thin trading conditions as Japan, China and UK remain closed for market holiday.
On the data front, Reuters reported U.S. manufacturing activity grew at a slower pace in April, likely constrained by shortages of inputs amid pent-up demand unleashed by rising vaccinations and massive fiscal stimulus. The Institute for Supply Management (ISM) said on Monday its index of national factory activity fell to a reading of 60.7 last month after surging to 64.7 in March, which was the highest level since December 1983. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index edging up to 65 in April.
Versus the Japanese yen, the dollar initially rose form 109.20 in New Zealand to 109.66 in Asia. Despite edging higher to a near 3-week high of 109.69 in European morning, price erased intra-day gains and tumbled to session lows of 108.90 due to broad-based usd's weakness on drop in U.S. Treasury yields before stabilisng, price last traded at 109.06 near the close.
The single currency initially fell from 1.2035 (New Zealand) to session lows of 1.2014 at European open. However, the pair quickly erased intra-day losses and rose to 1.2057 in Europe before ratcheting higher to intra-day high of 1.2075 in New York due to broad-based weakness in usd before easing.
Although the British pound fell from 1.3835 in Asia to session lows of 1.3801 at European open+ the pair found renewed buying and rallied to 1.3894 at New Yorl open and later hit intra-day high of 1.3931 in New York on usd's weakness as well as cross-buying in sterling especially versus euro before easing.
In other news, Reuters reported the European Central Bank can start to phase out emergency stimulus measures when the pace of coronavirus vaccinations reaches a critical level and the economy picks up speed, Luis de Guindos, the bank's vice president, told an Italian newspaper.
The ECB will next meet on June 10 and conservative policymakers are already calling for a cut in bond purchases, while others, particularly from the bloc's south, are arguing for continued patience in clawing back support. "If by speeding up the vaccination campaign, we manage to have vaccinated 70% of Europe's adult population by the summer and the economy starts to pick up speed, we may also start to think about phasing out the emergency mode on the monetary policy side," de Guindos told la Repubblica. "The normalisation of monetary policy should go hand in hand with the normalisation of the economy," he said in the newspaper interview.
Data to be released on Tuesday :
Australia trade balance, imports, exports, RBA interest rate decision, France budget balance, Swiss consumer confidence, U.K. markit manufacturing PMI, U.S. trade balance, redbook, ISM New York index, durables ex-defense, durable goods, factory orders, durable ex-transport, Canada building permits, trade balance, exports, imports, New Zealand GDT price index.
Trendsetter does not warrant or guarantee the accuracy, timeliness or completeness to its service or information contained therein. Trendsetter does not give, whatsoever, warranties, expressed or implied, to the results to be obtained by using its services or information it provided. Users are trading on their own risk and Trendsetter shall not be responsible under any circumstances for the consequences of such activities. Trendsetter and its affiliates, in no event, be liable to users or any third parties for any consequential damages, however arising, including but not limited to damages caused by negligence whether such damages were foreseen or unforeseen.