LONDON (AFX) - The dollar remains well-supported in very quiet midday holiday trade ahead of the Institute for Supply Management's index of US manufacturing activity this afternoon, dealers said. "Judging by last week's Chicago PMI, the signals are that the manufacturing sector in the US is likely turning around," said Paul Mackel, currency strategist at Dresdner Kleinwort Wasserstein. "This is a good sign for the US economic recovery and broadly in favour of the dollar." The ISM is expected to fall slightly to 54.3 in March after rising sharply to 54.7 in February, the first rise above 50 since July 2000. An index reading above 50 means that the manufacturing sector is expanding. In addition, the dollar firmed against the yen after a disappointing Tankan survey in Japan. The survey for March came in below expectations, prompting another bout of yen selling as the new fiscal year in Japan begins. The large manufacturers' diffusion index was flat at -38 against hopes of a slight rise. "The weakening yen looks like it will continue on the back of the disappointing Tankan," said Clifford Bennett, senior currency strategist at BNP Paribas. Dollar/yen ended last week around the 132.50 level and traders now think it could start heading towards the 135 level especially as Japan's institutions start investing abroad at the start of the new fiscal year. "We will likely see the yen under pressure, especially as the fiscal year-end has passed and the Japanese start shifting money abroad," said DKW's Mackel. Elsewhere, the growing crisis in the Middle East has raised the spectre of further Swiss franc appreciation on safe haven flows, to the likely chagrin of the Swiss National Bank. "Keep on watching that repo rate," said Mackel, in reference to the SNB's decision last week to cut its two-week lending rate.