The core event across all sources was the release of US economic data on Wednesday, with a particular focus on the Institute for Supply Management (ISM) Manufacturing Prices Paid component, which surged to 78.3 from 70.5, marking the highest reading since the supply chain crises of 2022 [1][2][3]. The ISM Manufacturing Purchasing Managers Index (PMI) also edged up to 52.7, indicating a third consecutive month of expansion in US factory activity [1][2][3]. Additional US data included ADP Employment Change for March at 62K, beating the 40K consensus, and February retail sales rising 0.6% month-on-month, both suggesting ongoing economic resilience [1][2][3].
Market reactions were notable across major currency pairs. GBP/USD rebounded by 0.6% to trade above 1.3300, recovering from March lows near 1.3150, though it remains below its 50-day and 200-day EMAs [1]. The recovery was tempered by dovish comments from Bank of England Governor Andrew Bailey, who stated that markets were 'ahead of themselves' in pricing rate hikes and emphasized that expectations for hikes were premature. J.P. Morgan subsequently trimmed its BoE rate hike forecast to just one in June, down from two [1]. For the US Dollar, the combination of strong data and hawkish commentary from Fed Governor Musalem, who said rates are likely appropriate 'for some time,' reinforced the view that the Federal Reserve is in no rush to cut rates [1][2][3].
USD/JPY closed nearly flat at 158.70 after recent declines, with the pair caught between US Dollar strength and Yen safe-haven demand. The Bank of Japan's Tankan large manufacturers sentiment index rose to 17 in Q1 2026, the highest since Q4 2021, and the manufacturing PMI was revised up to 51.6 in March. However, Yen gains were attributed more to verbal intervention from Japanese officials, with Vice Finance Minister Atsushi Mimura warning of 'decisive action' against speculative moves after USD/JPY breached 160.00 earlier in the week [2].
AUD/USD gained about 0.3%, bouncing from 0.6900 but stalling below 0.6950. Australian building permits for February surprised to the upside at 29.7% MoM versus a 6.5% consensus, and the Reserve Bank of Australia raised its cash rate to 4.10% in March. Markets are pricing a 65% chance of another hike in May, with inflation concerns tied to energy costs [3].
Silver (XAG/USD) consolidated around $75.07, failing to surpass resistance at the 20-day SMA ($76.90) as US Treasury yields pared losses and the US Dollar remained strong. The Relative Strength Index (RSI) turned flat in bearish territory, indicating waning bullish momentum. Key resistance levels are noted at $77.00 and $80.00, with support at $74.43 and $70.00 [4].
A major geopolitical event is also in focus, as President Trump is scheduled to address the nation on the war with Iran, with markets watching for any updates on the timeline for winding down Operation Epic Fury and potential impacts on the Strait of Hormuz [1][2][3].
CONCLUSION
US inflation data surprised to the upside, driving expectations that the Federal Reserve will maintain higher rates for longer and boosting the US Dollar across major pairs. Central bank commentary in the UK and Japan added to currency volatility, while commodity markets like silver stalled amid Dollar strength. Markets are also closely watching President Trump's upcoming address on Iran for further geopolitical developments.