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03/06/24
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Soft Manufacturing Data Pushes USD To 3-Week Low
On Monday, the US dollar dropped to a 3-week low after data indicated the U.S. economy was slowing down with lower-than-expected readings on construction and manufacturing spending, indicating that the Fed is set to begin cutting interest rates later this year.
The dollar dropped to a 2-week low versus the yen after the data and was last at about 156.245, down 0.6%.
The euro rose 0.3% to $1.0879, and this pushed the dollar index, which measures its strength against 6 other major currencies, 0.3% lower to 104.24. Earlier the index fell to a 3-week low at 104.22.
According to the U.S. Institute for Supply Management (ISM), its purchasing managers index (PMI) for manufacturing dropped from 49.2 in April to 48.7 in May, slipping from the 18-month high of 50.3 recorded in March.
BMO said in a research note that in May, the U.S. manufacturing sector shrank for the 18th time in the past 19 months.
U.S. construction spending in April also unexpectedly slipped for the second straight month, dropping by 0.1% after March’s 0.2% decline, amid declines in non-residential activity.
According to LSEG’s rate probability app, fed funds futures increased the probability of a rate cut in Sept. to about 59.1% after the construction spending and ISM data.
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