USD: Drop does not look too sustainable The dollar took a hit yesterday as US S&P Global PMIs came in weaker than expected. The composite index dropped to 50.9, with manufacturing moving back into contraction (49.9) and services slowing to 50.9. While these surveys aren’t as highly regarded as the ISM in the US, markets were probably surprised by the diverging patterns with eurozone PMIs. For the first time in 12 months, the eurozone composite PMI is higher than the US one. While the manufacturing picture remains much more clouded in the eurozone, the service sector appears to be in better shape. All this is naturally in contrast with the notion of US growth exceptionalism. Tomorrow, we’ll see how much GDP growth has slowed in the first quarter. While activity indicators could prompt some FX moves, the kind of major repricing in Fed expectations that we saw in April can only be triggered by lower inflation, soft employment figures, or Fed communication. So, the major risk events for the dollar in the coming days are: PCE inflation on Friday, the Fed meeting on 1 May, and jobs data on 3 May. The Fed Funds futures curve continues to price in only 40bp of easing this year.