US PMIs Miss… Again

The US Dollar was seen softening yesterday on the back of a weaker-than-forecast set of PMI readings for last month. The March manufacturing PMI was seen falling to 49.9 from 51.9 prior, well below the 52 expected. The dip back into contractionary territory is a disappointing move, marking the second consecutive month of decline in the sector and the lowest reading in four months. The services PMI just about managed to stay in positive territory though it too was lower at 50.9 from 51.7 prior, below the 52 expected. This was the third consecutive monthly decline in the sector and marks the lowest reading for five months. One major point of concern was employment, staffing levels were seen hitting their lowest levels since 2009 (excluding the pandemic impact).

Durable Goods Next

Looking ahead today, focus will shift to durable goods data due this afternoon. The market is expecting core durable goods to remain unchanged m/m at 0.3% with the headline set to rise to 2.5% from 1.3% prior. If seen, this should help steady USD. However, if we undershoot forecasts on the headline reading today this could well exacerbate current USD selling. Tomorrow, we have the next set of tier-one data due with advance GDP and unemployment claims. As such, plenty of USD volatility risk to track in the coming sessions.

Technical Views

DXY

The rally in the DXY has stalled for now ahead of the 107.04 level. With momentum studies softening, risks of a deeper pullback are growing. Bulls will need to keep price above the 104.95 level to maintain the broader bullish focus or risk a test of 103.48 next. 

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