Similar Themes Simmer, Dollar Dips

The Markit US PMI was slightly soft and it's a chance to highlight the market expectations about a blooming, booming Spring in the US. The Australian dollar led the way while USD lagged. Scheduled news in the Asia-Pacific region is light.  

Trading was dominated by unease about the US economy and sabre-rattling over Ukraine. There was more talk about Russian troop buildups on the border. G7 leaders met and promised more action but only if Eastern Ukraine is invaded. Unless that happens, the story will slowly fall off the front pages.

The economic story was the Markit PMI at 55.5 versus 56.5 expected. It's one of the first looks at March data and the US dollar selling afterwards highlights the two main ideas on the path of growth:

1) The economy will surge in Spring as pent up Winter demand is released 2) Pent-up demand will appear more slowly over the course of the year.

The differences for markets may be far-reaching. Fast-money traders are heavily invested in #1 but #2 is a real possibility (and there's also the chance that no fresh demand materializes at all).

data point like the Markit PMI isn't powerful enough to shakeout the trade and manufacturing was only marginally affected by weather but the market still took notice. In the weeks ahead, look for outsized reactions for US  economic data misses, especially on the downside.

One of the benefactors Monday was EUR/USD as it shot up above 1.38 and that's a cross that's set up technically to benefit from USD weakness. Another might be AUD/USD; the pair broke the 200-day moving average briefly. A close higher would be the first since last April and bears close watching in the days ahead.

The fast, non-fundamental moves in USD on Monday also underscore the lack of conviction in the market. Be nimble.