The US dollar is rallying against some of the most-traded currency pairs to kick off the trading week. The greenback is finding direction on recent data that suggest that the current bull run still has some legs and the economy could have additional room to grow. The buck was capped as traders had a renewed interest in China after a swath of data were released showing perhaps a recovery is in sight.
According to the Census Bureau, construction spending climbed 1% in February, following a 2.5% boost in the previous month. This beat the market forecast of a tepid 0.3% decline and is the strongest performance since summer 2018. Despite the sizzling performance, investment has only advanced 1.1% over the last 12 months.
While the construction industry has been more cautious in recent months because of rising interest rates, the sectorâs downward trend has reversed because of the Federal Reserveâs decision to hit the pause button on rate hikes. It is now expected that the first-quarter gross domestic product (GDP) will be a tad better than what the market has penciled in.
US manufacturing recovered last month after slumping to a two-year low in February. The Institute for Supply Management (ISM) reported that its manufacturing index increased from 54.2% in February to 55.3% in March, exceeding median estimates of 54.6%. Any reading above 50% indicates a growing economy.
The indexâs jump was driven by new orders rising 1.9 points to 57.4%, producing jumping one point to 55.8%, and employment soaring 5.2 points to 57.5%.
However, a separate manufacturing reading suggested a dip in March. The IHS Markit manufacturing purchasing managers index slipped from 53 in February to 52.4 last month, the lowest reading since June 2017.
Business inventories rose for the second consecutive month, reports the Department of Commerce. The US government said that business inventories edged up 0.8% in January, the second straight month of stockpiles growing. Supplies increased 1.2% for wholesalers, 0.8% for retailers, and 0.5% for manufacturers. Also, the ratio of inventories to sales rose from 1.38 to 1.39.
In February, US retail sales fell 0.2% for the second time in three months, signaling that a slowdown could be imminent. This was lower than the 0.3% economists had expected. However, revised numbers from the Census Bureau found January retail sales were a lot higher than initially reported: 0.7% compared to 0.2%.
Investors will now look ahead to the labor report on Friday.
The USD/CAD currency pair tumbled 0.25% to 1.3317, from an opening of 1.3350 at 20:01 GMT on Monday. The EUR/USD dropped 0.08% to 1.1210, from an opening of 1.1219.
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