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What’s happening: The US dollar moved lower on Tuesday, as investors assessed the latest jobs report.
What happened: The greenback had surged to its strongest level in around five months during Tuesday’s session but later pared gains.
Major currencies, including the euro and sterling, recorded gains versus the US dollar, following the release of economic data.
Why it matters: The US dollar recorded sharp gains on Monday after data showed an unexpected expansion in manufacturing. The ISM manufacturing PMI rose to a reading of 50.3 in March, from February’s level of 47.8. The figure came in much better than market expectations of 48.4.
Another report released on Monday signalled a sharp increase in prices, which fuelled speculations of a delay in inflation falling back to the US Federal Reserve’s 2% target and the central bank postponing its first rate cut decision.
The Labor Department said on Tuesday that job openings in the US had risen to 8.756 million in February, slightly higher than market estimates of 8.75 million.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose to 105.1 during Tuesday’s session, notching its strongest level since November 14. However, the index soon erased gains to settle lower by around 0.2% at 104.82.
The Japanese yen settled at 151.55 against the US dollar, after earlier falling to 151.79. The JPY/USD forex pair tumbled to a 34-year lower of 151.975 last Wednesday.
The EUR/USD, which had previously declined to its weakest level since mid-February, gained around 0.2% to 1.0770 on Tuesday. This was despite data showing Eurozone’s manufacturing PMI remaining in the contraction zone.
The GBP/USD forex pair rose from its weakest level since December, gaining more than 0.2% to 1.2577 after data showed UK manufacturing PMI rising to 50.3 in March, from a preliminary reading of 49.9.
What to watch: Investors await the release of major economic reports, including inflation rate from the Eurozone and jobs data from the US, this week. The US economy, which added 275,000 jobs in February, is expected to add 200,000 jobs in March. Analysts expect the unemployment rate in the US to remain unchanged at 3.9% in March.
Context: Markets in Europe settled lower on Tuesday, on the first day of trading after the long Easter weekend.
Details: European stocks ended the first quarter with gains, up about 6.8%, as investors assessed the latest inflation data to get further insights into the ECB’s (European Central Bank) future rate cut decisions.
European stocks began the new quarter with subdued sentiments, following the latest economic reports. Germany’s consumer price inflation eased to 2.2% in March, from 2.5% in the earlier month. The latest reading was the lowest since May 2021.
Median consumer expectations for Eurozone inflation over the next 12 months slipped to 3.1% in February. The HCOB Eurozone Manufacturing PMI increased to 46.1 in March, from a preliminary reading of 45.7. Investor sentiment was hurt by the sector remaining in the contraction zone.
The STOXX Europe 600 Index fell 0.80% to close at 508.57 on Tuesday, with most sectors closing in the red. Retail shares fell around 2.1%, while mining stocks bucked the trend to add approximately 1.9% during the session.
London’s FTSE 100 slid 0.22% to close at 7,935.09 and Germany’s DAX 40 dipped 1.13% to 18,283.13, while France’s CAC 40 declined 0.92% to settle at 8,130.05.
What to watch: Investors await the release of economic data on consumer price inflation and unemployment from the Eurozone today. The consumer price inflation rate in the Eurozone is expected to remain unchanged at 2.6% year-over-year in March, while the annual core inflation rate is projected to ease to 3%, from 3.1% in February.
Analysts expect the unemployment rate in the Eurozone to remain unchanged at 6.4% in February.
Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.00%, 0.72% and 0.94%, respectively.
Although a Ukrainian drone hit the third-biggest oil refinery in Russia on Tuesday, the strike did not result in critical damage. The news sent the WTI crude oil prices slightly higher this morning.
Singapore’s S&P Global PMI fell to 55.7 in March, from 56.8 in February, which exerted pressure on the SGD/USD forex pair.
Japan’s au Jibun Bank services PMI was revised lower to 54.1 in March, versus a preliminary reading of 54.9, sending the JPY/USD pair lower in forex trading this morning.
Australia’s Ai Group Industry Index for the manufacturing sector rose by 5.6 points to a reading of -7 points in March. However, the sector remaining in the contraction zone exerted pressure on the AUD/USD forex pair.
South Korea’s foreign exchange reserves rose to $419.25 billion in March, from $415.73 billion in the prior month, which sent the KRW/USD pair higher in forex trading this morning.
Russia’s unemployment rate, business confidence, corporate profits, real wages, retail sales, composite PMI and services PMI, France’s government budget value, Turkey’s inflation rate, producer price inflation, balance of trade and total vehicle sales, Brazil’s composite PMI, services PMI, IPC-Fipe inflation and industrial production, Italy’s unemployment rate, India’s money supply M3, Mexico’s gross fixed investment, US MBA mortgage applications, ADP employment change, ISM services PMI, Crude oil inventories, gasoline stocks change, distillate inventories, Logistics Manager’s Index, total vehicle sales, composite PMI and services PMI, Canada’s composite PMI and services PMI, as well as Argentina’s tax revenue.
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