On Tuesday, the dollar index (DXY) rose by +0.42% as safe-haven demand increased amid concerns over the ongoing war in Iran. Crude oil prices surged by 4%, heightening inflation fears and prompting speculation that the Federal Reserve may tighten monetary policy. Separately, the U.S. is considering deploying approximately 3,000 troops from the Army’s 82nd Airborne Division to the Middle East.
In economic data, U.S. Q4 nonfarm productivity remained at +1.8%, while unit labor costs were revised up to +4.4%, exceeding expectations of +3.6%. The Mar Richmond Fed manufacturing index increased to a 13-month high of 0, surpassing forecasts of -8. Elsewhere, the Eurozone’s Mar S&P manufacturing PMI unexpectedly rose to 51.4, its strongest expansion in over three years, despite the euro dropping by -0.20% against the dollar as crude prices negatively impacted the Eurozone economy.
In Japan, Feb national CPI rose by +1.3%, falling short of the +1.5% expectation, and the Mar S&P manufacturing PMI dropped to 51.4. Markets are pricing in a 59% chance of a 25 basis point rate hike from the Bank of Japan at its April 28 meeting.
