On Monday, the US Dollar asserted dominance despite major market closures for Easter Monday. Investors turned their attention to growth-related data, starting with China’s report of a robust manufacturing output in March. However, this news failed to sustain investor optimism.

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Financial markets had already factored in Friday’s revelation that US inflation, as gauged by the Personal Consumption Expenditures (PCE) Price Index, remained steady at 2.8% year-on-year in February. Federal Reserve (Fed) Chairman Jerome Powell emphasized the central bank’s cautious approach, indicating no rush to raise rates amidst persistent inflation and a resilient economy.

The weekend brought hawkish remarks from European Central Bank (ECB) officials, though they failed to uplift sentiments. Austrian Central Bank Governor Robert Holzmann hinted at potential interest rate cuts ahead of the US Fed, contingent upon wage and price developments by June. Similarly, Bank of Greece Governor Yannis Stournaras proposed multiple rate cuts this year, suggesting a potential 25 basis points reduction four times in the year.

The US Dollar surged following the release of the United States (US) ISM Manufacturing Purchasing Managers’ Index (PMI), which surpassed expectations. March witnessed a notable expansion in the manufacturing sector, marking a turnaround after 16 consecutive months of contraction. The index surged to 50.3 from February’s 47.8. Meanwhile, S&P Global’s Manufacturing PMI, though slightly below expectations at 51.9, still indicated expansionary levels.

Currency markets saw EUR/USD stabilizing around 1.0740, near February’s low at 1.0694, while GBP/USD hovered around 1.2545. USD/CHF maintained a strong position above 0.9040. Commodity-linked currencies experienced declines in tandem with US indexes, with AUD/USD at approximately 0.6480 and USD/CAD at 1.3580. Finally, USD/JPY stood firm at 151.60.

Gold prices witnessed a significant surge, hitting $2,265 per troy ounce, a record high, before retracing slightly to around $2,240 in the mid-US afternoon.

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