The US Dollar stabilised to a certain extent, supported by stronger-than-expected economic data and firming Treasury yields.
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April’s ISM Services PMI rose to 51.6, beating expectations and signalling resilience in the US services sector.
The subindex on prices paid surged to 65.1, the highest in over two years, adding to concerns that inflationary pressures could remain sticky.
Combined with Friday’s robust Non-Farm Payrolls report, these figures may prompt the Federal Reserve to adopt a more cautious approach, delaying interest rate cuts and offering temporary support to the greenback. Meanwhile, the yield on the 10-year US Treasury note rose above 4.35% as markets reassessed the monetary policy outlook.
Nonetheless, broader uncertainty persists. US-China tariff dynamics remain unresolved, and while the Trump administration has expressed openness to new trade deals, concrete progress is lacking. This backdrop is likely to cap upside momentum for the dollar.
Looking ahead, markets will closely monitor Wednesday’s Fed decision and Chair Powell’s press conference for further policy signals. While dovish remarks could weigh on the currency, a cautious tone may enhance the dollar’s appeal.
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