The US Manufacturing PMI accelerated from 47.8 to 50.3 in March 2024. All sub-indices rose, reflecting the resilience of the US economy.

The US Dollar strengthened considerably against most of its major rivals in early-month trading, following the release of strong US Manufacturing PMI data. The US Dollar Index (DXY) was still perched at around 105.05 at the end of the Asian session on Tuesday (2/April).


ISM reported that the Purchasing Managers' Index (PMI) survey result for the US manufacturing sector in March 2024 surged from 47.8 to 50.3. The figure blew away the consensus forecast of 48.4.

A breakdown of the data revealed that inflationary pressures were back on US manufacturing firms, as the Prices subindex soared from 52.5 to 55.8. Similarly, the New Orders subindex increased from 49.2 to 51.4, and the Employment subindex climbed from 45.9 to 47.4. These figures support the Fed in keeping interest rates high for longer.

The manufacturing sector data alone was not powerful enough to shake market expectations regarding the start of the rate cut - until now, it is still locked in June. However, the data was strong enough to boost the USD until the next high-impact data release.

"The divergence of solid growth dynamics for the U.S. and waning Fed rate cut risk against sluggish growth for other FX majors suggests that any DXY dips should be seen as buying opportunities," said Westpac's head of currency strategy, Richard Franulovich, referring to the dollar index.

Since mid-February, EUR/USD and GBP/USD are now pressured at their lowest levels. AUD/USD slows at its lowest level in almost a month.

Only the Japanese yen has put the brakes on a further US dollar rally. This is because the risk of intervention continues to loom over all currency pairs involving the yen. Japanese Finance Minister Shunichi Suzuki has repeatedly emphasized that he will not rule out any options to bring order to currency movements that are deemed excessive.