The US dollar weakened to kick off the holiday-shortened trading week as financial markets rallied and economic data slumped. The greenback has been nosediving since banking conditions appeared to have stabilized in the past week. Will the bears feast on the buck?

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) contracted for the fifth consecutive month, sliding to 46.3 – anything below 50 indicates contraction. This is down from 47.7 in February and below the market estimate of 47.5.

Manufacturing employment declined to 46.9, new orders fell to 44.3, and prices dropped to 49.2.

“New order rates remain sluggish as panelists become more concerned about when manufacturing growth will resume. Supply chains are now ready for growth, as panelists’ comments support reduced lead times for their more important purchases. Price instability remains, but future demand is uncertain as companies continue to work down overdue deliveries and backlogs. Seventy percent of manufacturing gross domestic product (GDP) is contracting, down from 82 percent in February,” said Timothy Fiore, the Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “However, more industries contracted strongly; the proportion of manufacturing GDP with a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing sluggishness — was 25 percent in March, compared to 10 percent in February, 26 percent in January and 35 percent in December 2022.”

The S&P Global Manufacturing PMI improved to 49.2, up from 47.3 in February. This was slightly below market expectations of 49.3.

According to the Census Bureau, construction spending tumbled 0.1% in February, down from the 0.4% increase in January.

All eyes will be on Friday’s March non-farm payroll (NFP) report, which is projected to show 240,000 new jobs.

The US Treasury market was mostly in the red on Monday, with the benchmark ten-year yield down 7.1 basis points to 3.419%. The one-month bill shed 1.1 basis points to 4.693%, while the 30-year bond fell more than six basis points to 3.627%.

The US Dollar Index (DXY), which measures the greenback against a basket of currencies, plunged 0.39% to 102.11, from an opening of 102.63. Year-to-date, the index is down 1.36%.

The USD/CAD currency pair plummeted 0.65% to 1.3431, from an opening of 1.3519, at 14:26 GMT on Monday. The EUR/USD advanced 0.61% to 1.0909, from an opening of 1.0843.