US Dollar Rallies Higher on Manufacturing PMI Releases

The US dollar today rallied against some of its main trading peers including the euro and the Canadian dollar. The greenback’s rally was triggered by the release of the IHS Markit US Manufacturing PMI for March, which was slightly lower than expected, but still tilted the scales in favor of the greenback.

The US Dollar Index, which tracks the greenback’s performance against a basket of its peers, rallied from a daily low of 89.82 to a high of 90.15.

The IHS Markit US Manufacturing PMI came in at 55.6, which was its highest level since March 2015, missing expectations by 0.1. Other releases from the US docket such as the ISM Manufacturing and Employment indices also contributed to the greenback’s rally. The ISM manufacturing activity was lower than expected by coming in at 59.3 as compared to the consensus estimate of 60.0, but the prices paid sub-index rose to 78.1 in March, which was higher than expected. The ISM employment index came in at 57.3 in March, which was slightly lower than the previous 59.7.

The greenback rallied against the loonie despite the IHS Markit Canadian Manufacturing PMI coming in at 55.7 versus the previous 55.6. Given that today was Easter Monday, there were no releases from the European docket, which contributed to a data-light trading session.

The DXY’s future performance is likely to be affected by the unfolding trade war between the US and China as well as key US releases such as the non-farm payrolls scheduled for later this week.

The EUR/USD currency pair was trading at 1.2290 as at 16:27 GMT having declined from a high of 1.2345. The USD/CAD currency pair was trading at 1.2921 having rallied from a low of 1.2861.

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