Daily digest market movers: US Dollar on the back foot for the second straight day

Bloomberg reported on Tuesday that Chinese Yuan has surpassed the US Dollar as the most traded currency, in monthly trading volume, for the first time in Russia in February. According to the outlet, the gap has continued to widen in March.

Last week, Brazil and China have reached an agreement to stop using the US Dollar as an intermediary in trade transactions.  

The CME Group FedWatch Tool shows that markets are pricing in a 58% probability of the Fed raising its policy rate by 25 basis points (bps) to the range of 5-5.25% in May.

On Sunday, Saudi Arabia announced that several producers in OPEC will participate in voluntary output cuts from May to the end of the year. The group’s total output will be reduced by more than 1.5 million barrels per day in that period.

The barrel of West Texas Intermediate (WTI) started the week with a large bullish gap and touched its highest level since late January above $82. Following a consolidation phase, WTI holds comfortably above $80.

Federal Reserve Bank of St. Louis President James Bullard said on Monday that the unexpected decision by OPEC to lower output could make the Fed’s jobs of bringing inflation down back to 2% target more challenging.

ISM’s Report on Business revealed on Monday that the headline Manufacturing PMI declined to 46.3 in March from 47.7 in February, revealing a contraction at an accelerating pace in the manufacturing sector’s economic activity.

The Prices Paid Index of the PMI survey, the inflation component, dropped to 49.2 from 51.3. This reading suggests that input inflation in the sector softened in March.

Fueled by the upbeat performance of energy shares, the S&P 500 closed in positive territory on Monday.

US stock index futures trade modestly higher on Tuesday. 

February Factory Orders and JOLTS Job Openings will be featured in the US economic docket on Tuesday.

Later in the week, the ISM Services PMI survey, ADP private sector employment data and the US Bureau of Labor Statistics’ March jobs report could influence the US Dollar valuation.