During today's Asian trading, the US dollar rose slightly against major currencies, continuing yesterday's increase and reaching its highest level since March 6, helped by favorable US PMI data and cautious optimism about tariff policy.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.08% to 104.39. Yesterday's data from S&P Global showed that expansion in U.S. private sector business activity picked up momentum in early March as a marked upturn in the service sector activity offset a renewed contraction in manufacturing production. U.S. Composite PMI Output Index came in at 53.5 early this month, up from 51.6 in February. The latest reading signalled the quickest growth in business activity since December 2024. Services PMI checked in at 54.3 in March, strongly up from 51.0 in February. This pointed to the strongest growth in activity across the services sector so far this year. Economists had predicted the services PMI to slip to 50.8. Meanwhile, manufacturing PMI fell to 49.8 from 52.7 in February. The latest print indicated the first deterioration in business conditions within the goods-producing sector since December 2024. Economists had forecast the manufacturing PMI to decrease to 51.8. As for the US tariff policy, yesterday Donald Trump said not all of his threatened levies would be imposed on April 2 and some countries may get breaks. These statements have weakened some fears about a possible slowdown in U.S. growth. Investor attention will now be on the size of the reciprocal tariffs to be announced next week as well as which countries will be targeted by the Trump administration.
The yen fell another 0.1% against the US dollar after dropping 0.98% yesterday, to its lowest level since March 3. The yen has been a laggard for weeks, even though concerns about tariffs and economic growth weighed on the dollar until the Fed meeting last week changed the mood, as the Central Bank made it clear that it was in no hurry to cut interest rates. The Bank of Japan also maintained the status quo at its March meeting, but warned of increased global economic uncertainty. However, many analysts still expect the Bank of Japan to resume tightening monetary policy in the third quarter, most likely in July. Minutes of the BOJ's January meeting released on Tuesday showed policymakers discussed the pace of raising interest rates.