US ISM Manufacturing grows, dollar rises

The US ISM Manufacturing PMI grew for the first time since September 2022

By Nadia Elbilassy | @Nadia Elbilassy | 2 April 2024

Market open
  • Fed rate cut expectations for June decreased due to easing U.S. prices and strong ISM manufacturing PMI.

  • Yen's movement towards 1990 levels prompts speculation of potential Japanese intervention.

  • Finance Minister Suzuki warns against excessive yen fluctuations, hinting at possible intervention.

On the Market Watch:

The odds of a June hike!

Market expectations for a Federal Reserve rate cut in June decreased, following an increase in odds spurred by Friday's news of easing U.S. prices, where the personal consumption expenditures index rose 0.3% in line with expectations.

Additionally, yesterday's release of the US ISM manufacturing PMI for March, which exceeded expectations at 50.3 compared to the anticipated 48.5 and February's 47.8, provided additional evidence of a robust economy. Dampening expectations for rate cuts, pushing them beyond June.

Market focus is on the Yen

Focus in the currency market has shifted towards the yen, as its movement towards levels not seen since 1990 raises concerns about potential intervention by Japanese authorities Last week, the yen plummeted to a 34-year low against the dollar, near 151.975, a threshold historically prompting bank interventions.

Similarly, in September 2022, the Bank of Japan (BoJ) intervened when the USD/JPY pair reached this level. Given this backdrop, markets are rife with speculation regarding the possibility of another intervention, closely monitoring the situation for any signs of official action.

Finance Minister Shunichi Suzuki stated on Monday that he wouldn't rule out actions against excessive currency movements and would respond appropriately. This reiterated his caution regarding rapid yen fluctuations.