Strong US ISM Manufacturing PMI and a jump in prices paid, to keep Fed on hold

The Institute for Supply Management (ISM) revealed that business activity in March expanded for the first time since September 2022, an indication that the economy remains solid. The Manufacturing PMI came at 50.3, exceeding estimates of 48.4 and smashing February’s 47.8 reading. The same report revealed that the Prices Paid Index expanded to 55.8, its highest level since August 2022, when it hit 52.5. This could deter the Federal Reserve from easing policy, as the economy fares better than expected.

At around 13:45 GMT, S&P Global revealed the latest revision of March’s Manufacturing PMI for the United States, coming at 51.9, below the previous reading of 52.2.

Following the data, the EUR/USD has extended its losses past the psychological 1.0750 figure, which could exacerbate a test of the February 14 swing low of 1.0694.

In the meantime, the US Dollar Index (DXY), which measures the buck’s performance against a basket of peers rally 0.36%, is up at 105.93, while US Treasury yields rise. The 10-year benchmark note rate is at 4.305%, up almost ten basis points.

Following the data release, money market traders see a 61% chance of the Fed cutting rates by 25 basis points, as depicted via the CME FedWatch Tool.

Across the pond, the Eurozone (EU) economic docket will feature the release of the HCOB manufacturing PMI for Spain, Italy, France, Germany, and the whole bloc. Most readings, except for Spain, are expected to deteriorate further and remain in recessionary territory.