Dollar Slips on a Day With Several Markets Closed for Holiday – Currency Thoughts

Dollar Slips on a Day With Several Markets Closed for Holiday

May 5, 2025

The dollar depreciated overnight by 0.8% against the yen, 0.6% relative to the kiwi, 0.5% versus the Swiss franc and Aussie dollar, 0.4% vis-a-vis the euro and 0.3% against sterling. U.S. share prices are trading in the red in contrast to rises of 1.0%, 0.5% and 0.3% in the German, Spanish and Italian stock exchanges. Among ten-year sovereign debt yields, the U.S. Treasury rose five basis points, German and French yields are flat, and the Italian and Spanish yields have dipped a tad. The price of gold rebounded 2.4%, while those of Bitcoin (-0.5%) and oil (-2.6%) fell.

Market volumes have been constrained by holiday closures in the U.K. for the early spring banking holiday, Japan for observances of Children’s Day, China for extended labor day celebrations, and Hong Kong for Buddha’s birthday. Mexico’s cultural Cinco de Mayo celebrations are today as well.

There were fresh remarks from U.S. President Trump for investors to digest, such as an announced decision to impose a 100% tariff on foreign-made films, promises of many trade deals coming soon, but a choice not to engage in direct talks with Chinese President Xi over trade.

The April U.S. composite S&P Global purchasing managers index was revised downward to a 19-month low of 50.6 from an initial estimate of 51.2 and a reading of 53.5 in March. The services PMI fell to a 17-month low of 50.8 from a preliminary 51.4 reading and 54.4 in March. In contrast, the non-manufacturing PMI compiled by the Institute for Supply Management unexpectedly rebounded from a 9-month low of 50.8 in March to a 2-month high of 51.6 last month. The orders and employment sub-indices also rose to 2-month highs (52.3 and 49.0), while the inflation gauge jumped 4.2  index points to a 26-month high of 65.1, giving Fed officials further incentive not to obey Trump’s call for an interest rate cut.

Among other April purchasing managers surveys published today,

• The non-oil PMI readings for Saudi Arabia fell 2.5 points to an 8-month low but still-robust 55.6 in April, while the U.A.E.’s comparable survey matched March’s 6-month low of 54.0.
• Australia’s final composite PMI printed at 51.0, 0.4 points lower than its preliminary estimate, and down from a 7-month peak of 51.6 in March. The services PMI slid 0.6 points to a 2-month low of 51.0 as well.
• Sweden’s composite PMI of 50.6 was at a half-year low, while its services PMI printed at a 29-month high of 54.2.
• The Russian manufacturing PMI recovered to 49.3 in April from a 35-month low in March of 48.2.
• In Vietnam, which was initially targeted with one of Trump’s highest tariffs, the manufacturing PMI sank to a 23-month low in April of 45.6 from 50.5 in April.
• Canada’s composite purchasing managers index slumped to a record low in April of 41.7. Such first fell below the 50 threshold between expansion and contraction and set its all-time high of 56.1 back in March 2023. Canada’s service sector PMI edged up 0.3 points to a 2-month high of 41.5.

Turkish consumer price inflation, which after cresting at 85.5% in October 2022 fell to as low as 38.2% in mid-2003 only to return to 75.5% by March 2024, extended its second wave of deceleration to a 40-month low of 37.9% last month. Producer price inflation printed at a 54-month low in April of 22.3%, well below  its peak of 157.7% in October 2022.

Swiss consumer price inflation dropped to a 37-month low in April of zero percent. Such had been as high as 3.5% in August 2022 but as low as -1.3% in mid-2020 when the Covid pandemic was wreaking havoc with the global economy.

Serbian producer price inflation, which crested at 19.8% in July 2022, was  negative 0.4% last month.

A 4.87% year-on-year increase in Indonesian real GDP in 1Q 2025 was its smallest gain in 14 quarters.

The Sentix gauge of investor sentiment toward the euro area economy recovered more than 10 index points to a 2-month high of -8.1 this month from -19.5 in April and Trump imposed a temporary suspension of his highest tariff intentions.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Swiss and Turkish CPI, U.S. service PMI

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on Monday, May 5th, 2025 at 9:25 am and is filed under New Overnight Developments Abroad – Daily Update.
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