The AUD is the strongest and the JPY is the weakest of the major currencies today.

The strongest to the weakest of the major currencies

The JPY moved lower (USDJPY higher) as follow-through buying on top of the strong gains on Friday took the USDJPY pair above its 200 day MA at 137.01 (the green line on the chart below). Recall, the BOJ kept rates unchanged on Friday with BOJ head Ueda announcing that year curve control remained unchanged.

USDJPY moves above its 200 day moving average

Canadian dollar outperformed despite falling oil prices, partly due to a rise in Canadian manufacturing PMI data (50.2 vs 48.6 est). The Australian dollar performed well, likely due to positioning ahead of the RBA meeting in the new trading day (the central bank is expected to keep rates unchanged at 3.6%). The euro, pound, Swiss franc, and New Zealand dollar weakened against the stronger US dollar.

The USD catalyst today was due to better-than-expected US Manufacturing ISMs and the acquisition of First Republic by JPMorgan, which helped reduce banking fears.

The Manufacturing PMI increased slightly from 46.8 last month to 47.1, but the sector still contracted for the sixth consecutive month. Nevertheless, prices paid rose more than expected to 53.2 compared to 49.2 last month, with increased costs for raw materials like steel, copper, plastics, and diesel. Markets remained sensitive to increased inflation. Employment also improved from 46.9 to back over the 50 level at 50.2, while new orders increased from 44.3 to 45.7. That combination gave buyers of the dollar ammunition to push the greenback higher. The Bureau of Labor Statistics will announce their latest employment numbers on a Friday at 8:30 AM ET

Before the employment statistics, the The Federal Reserve will start their two-day meeting tomorrow where they are expected to raise interest rates by 25 basis points, marking the fastest rate increase cycle in 40 years (the decision will be made at 2 PM ET on Wednesday). While officials believe they're nearing the end of the tightening journey, they continue to debate the next steps. A quarter-point increase would set a 16-year high for the benchmark federal-funds rate. The policy statement after the meeting will provide insight into the Fed's stance on interest rates. Officials are also monitoring bank deals, mergers, and recent midsize bank failures, remaining cautious about potential unanticipated financial stresses.

Crude oil prices today dropped by 1.5% on Monday due to concerns that the Federal Reserve may continue with rate hikes if upcoming US job numbers for April are strong.

In the US debt market yields moved sharply higher on the back of the better ISM data:

  • 2 year yield 4.153% +8.9 basis points
  • 5 year yield 3.637% +10 basis points
  • 10 year yield 3.570% +11.8 basis points
  • 30 year yield 3.809% +13.3 basis points

In the US stock market, the major indices opened the month of May with modest declines:

  • Dow industrial average fell -46.46 points or -0.14% at 34051.71
  • S&P index fell -1.61 points or -0.04% at 4167.88
  • NASDAQ index fell -14.0 points are -0.11% at 12212.59
  • Russell 2000 rose 0.22 points or 0.01% at 1769.21

In other markets gold trade higher on initial dollar declines early in the US session, but then reverse course after the ISM data. It is trading down $7.72 or -0.39% at 1981.90.

Bitcoin traded as high as $29,344 and as low as $27,666. It is currently trading at $27,785