The euro is up a bit after yesterday’s big drop to 1.0255.
The dollar is down -0.3% to 1.0295 after European bond yields rose unexpectedly. There was no major data from the Eurozone. French OAT yields rose 8 bps to 3.293% and German Bunds 6 bps to 2.4270%.
The dollar could have continued to rally after the ISM manufacturing index rose more than expected. The index came in at 49.3 for the month, up from 48.4 in November. Jefferies had expected a decline to 47, not a 2% increase.
This is the opposite of the manufacturing PMI which was released yesterday by S&P Global which showed a slight decline from 49.7 to 49.4 m/m.
Despite the ISM surprise the Dollar Index didn’t rally, down 0.25% to 109.00. The dollar fell vs the Pound and the Franc, down 0.3% to 0.35%. But vs the Yen it was down less, -0.25% to 157.10.
The ISM on Friday makes it more likely the Fed will only cut once, as the Fed said on Dec 18 the economy is strong and inflation risks are still there. In Europe where the economy is flat the ECB will cut at least 3 times in 2025.
