On Monday, the dollar rose to multi-week highs against the euro and yen, driven by an improvement in U.S. business activity in March and reports that the Trump administration may take a flexible approach regarding upcoming tariff measures.
Data showed that the U.S. S&P Global Composite Purchasing Managers' Index (PMI) rose to 53.5 in March, up significantly from 51.6 in February. A PMI reading above 50 indicates economic expansion, with growth in the services sector being the primary driver of the overall index's rise, partly boosted by warmer weather. However, manufacturing fell back into contraction territory after two months of growth.
Adam Button, chief forex analyst at ForexLive, stated that the services sector is a core part of the U.S. economy, making this rebound data positive.
As a result, the dollar rose 0.82% against the yen, ending at 150.54 yen in New York's late trading, having touched 150.75 yen intraday, the highest level since March 3. The dollar also rose against the euro, causing the euro to fall 0.09% to 1.0804 dollars, having hit a low of 1.078 dollars intraday.
On Monday, Trump reiterated that he would soon announce a new round of tariffs on cars, aluminum, and pharmaceuticals, but multiple media outlets reported that certain industries are expected to receive exemptions. This eased concerns over an initial comprehensive tariff coverage, which also supported the dollar.
Meanwhile, the yield on the 10-year U.S. Treasury note rose by 8.3 basis points to 4.335%, further strengthening the dollar against the yen.
Despite the strong performance of the dollar on the day, its overall trend for the year remains pressured. The latest data from the U.S. Commodity Futures Trading Commission (CFTC) shows that market speculators turned net short on the dollar last week for the first time since October last year, reflecting persistent doubts about the dollar's medium to long-term outlook.
In Europe, March business activity in the eurozone grew at the fastest pace in seven months, with a slight relief in manufacturing malaise, but the slowdown in service sector expansion limited the euro's performance. The British pound gained slightly against the dollar, up 0.04% to 1.292 dollars, as markets awaited the spring budget announcement from UK Chancellor of the Exchequer Rachel Reeves.
Elsewhere, the Turkish lira slightly depreciated to around 38 lira amid nationwide protests triggered by the arrest of Istanbul's mayor Ekrem İmamoğlu on corruption charges, exacerbating the lira's volatility due to political uncertainty.
Additionally, the market continues to focus on geopolitical situations. U.S. and Russian officials held talks in Saudi Arabia concerning the Ukraine conflict, aiming to reach a maritime ceasefire agreement in the Black Sea before a broader deal, a development that could influence future global market stability.
