Bonda Asia: The US dollar rises, oil prices retreat, USD/CAD hits a 9-week high again

On March 25, data released by S&P Global on Tuesday showed that the preliminary U.S. composite Purchasing Managers’ Index (PMI) fell by 0.5 points to 51.4, the lowest level in nearly a year. Although the index is still above the 50 boom-or-bust line, it indicates that economic activity continues to expand, but the momentum for expansion has clearly weakened. Meanwhile, the corporate input price index surged by more than 3 points, rising to its highest level since May last year. Breaking it down by category, the services sector became the main factor dragging overall performance. In March, the services activity growth rate fell to its lowest level in nearly a year, and its input costs also rose to a high level since May last year; for the manufacturing sector, raw material costs rose to a 7-month high. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that uncertainty stemming from the Middle East conflict and rising cost of living are suppressing demand. He noted that the travel, transportation, and tourism-related industries were hit particularly hard, while factors such as volatility in financial markets, high interest rates, soaring energy prices, and supply chain delays further reduced the ability of businesses and consumers to absorb the impact.

In addition, on Tuesday, Chicago Fed Chair Goolsbee warned that the energy shock caused by the Iran war poses a threat to the Fed’s dual mandate, complicating the outlook for monetary policy and possibly delaying rate cuts—consistent with an earlier view from Fed Governor Barr, that inflation risks and oil-price support will keep rates unchanged for longer. Specifically, energy price shocks pose risks to both of the Fed’s dual mandates, making the trade-off between controlling inflation and supporting economic growth even more complex. “A new shock has no doubt disrupted the Fed’s plans… and before the shock occurred, inflation was already uncomfortably high,” Goolsbee said directly. Goolsbee added that policymakers at central banks, when dealing with the intertwined situation of current geopolitical risks and inflation pressure, lack clear historical experience to draw on, so “this is a bad situation for central banks.”

Today, the data to watch include: the UK 2月 CPI year-over-year rate; the UK 2月 Retail Price Index year-over-year rate; the UK 2月 unadjusted Input PPI year-over-year rate; Germany’s March IFO business climate index; the U.S. 2月 import price index month-over-month; and the U.S. fourth-quarter current account.

Gold/USD

Gold yesterday fluctuated upward. The daily chart closed slightly higher, with the spot price trading around 4560. In addition to short-sellers covering their positions, which provided some support to the exchange rate, the market’s risk-averse sentiment also provided some support to gold. However, renewed expectations for the Fed to raise rates and the rebound in the U.S. dollar index have limited gold’s upside space. Today, watch the pressure around 4650; support is seen around 4450.

USD/JPY

USD/JPY yesterday fluctuated upward. The daily chart closed slightly higher, with the spot price trading around 159.00. Besides short-sellers covering their positions, which provided some support to the exchange rate, the rebound in the dollar index—supported by factors such as strong economic data—also provided some support. In addition, weak CPI data from Japan during the period also provided some support to the exchange rate. However, concerns about intervention by the Bank of Japan in FX markets have limited the exchange rate’s upside potential. Today, watch the pressure around 160.00; support is seen around 158.00.

USD/CAD

USD/CAD yesterday fluctuated upward, reaching a 9-week high, with the spot price trading around 1.3780. Besides the rise in the dollar exchange rate driven by the dollar index climbing on support from strong economic data, falling back from high levels in crude oil prices—due to news about Middle East talks—also provided some support to the exchange rate. However, expectations that crude oil prices will remain high in the near term have limited the exchange rate’s upside potential. Today, watch the pressure around 1.3850; support is seen around 1.3700.

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责任编辑：陈平