The strength of the US dollar has returned at the start of the week, after some impressive figures from the ISM manufacturing report for March. Although the events and developments from Friday are also helping the Buck. The surge in US Treasury yields today, with the US 10-year yields rising by around 15 basis points as they surged to 4.34%, also contributed to the strength of the US dollar.

Higher yields generally attract investors to US assets, leading to increased demand for the US dollar. Besides that, the remarks made by Federal Reserve Chair Jerome Powell late on Friday could have also bolstered the US dollar in thin liquidity during the Easter holiday. Powell’s comments, which suggested confidence in the US economy and hinted at a slower pace of monetary policy easing, may have reassured investors and supported the US dollar.

However, the jump came after the ISM manufacturing numbers, showing that this sector left behind the recession and is now in expansion, while prices also increased. USD/JPY popped around 50 pips higher, hitting the take-profit target of our forex signal here.

US March 2024 manufacturing data from the Institute for Supply Management

• March ISM Manufacturing Index: 50.3 points, surpassing the expected 48.4 points and higher than the previous reading of 48.4 points.
• Prices Paid: Registered at 55.8 points, compared to the previous reading of 52.5 points.
• Employment: Reported at 47.4 points, up from the previous reading of 45.1 points.
• New Orders: Stood at 51.4 points, showing growth from the previous reading of 49.2 points.
• Inventories: Recorded at 48.2 points, compared to the previous reading of 45.3 points.
• Production: Noted at 54.6 points, indicating an increase from the previous reading of 48.4 points.

Comments in the ISM Manufacturing Report:

• Chemical Products: Performance remains strong, defying expectations of a downturn. Demand is robust, and there’s optimism for future orders.
• Transportation Equipment: Expectations for increased orders and production in the second quarter. Collaboration with suppliers to drive down costs and improve margins.
• Food, Beverage & Tobacco Products: Commodity prices are stable, indicating a steady market.
• Computer & Electronic Products: Despite soft demand, optimism persists for future orders in the second quarter. Supply chain issues are minimal, with semiconductor availability being a concern.
• Machinery: Suppliers are becoming more selective with orders. Increased acquisition interest from larger entities was observed.
• Fabricated Metal Products: Business remains strong, meeting or exceeding forecasts. No significant negative impacts were reported from customers or raw material suppliers.
• Paper Products: Concerns about energy pricing affecting operations. Demand increased due to electrification, but stability in energy supply is a challenge.
• Petroleum & Coal Products: Potential impacts of the presidential election on long-term agreements and contracts being considered.
• Primary Metals: Softness in the industrial sector, but optimism for increased order activity in the late second quarter. The aerospace and defense market showing strong demand.
• Wood Products: Business activity is up, with anticipation of better performance in the second and third quarters. Second-quarter bookings starting to increase.

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