The US dollar index slipped on Tuesday, trading at an almost two weeks low, on the back of improved risk sentiment and broader dollar weakness. Broader dollar weakness has been the theme, the dollar has been dropping since last week Friday against its major rivals, and some EM currencies. With less than expected jobs data delivering the first blow to the dollar, the expected effect of a large stimulus, together with eased monetary policy environment softened the dollar further. Concerns around the pace of the US economic recovery in particular and sliding Treasury yields also weighing on the dollar, the greenback dipped to a low of 90.426 before ending the session at 90.
Following a relatively range bound session the previous day, the single currency broke-out on Tuesday, reaching a six session high on the day. The euro was amongst the biggest winners against the struggling dollar yesterday. The single currency rose to a high of $1.21205 before ending the session at $1.2120.
Pound sterling edged higher, adding gains for a 4th consecutive in yesterday’ session, also soaring to highs last seen in April 2018, thus shrugging off Brexit woes. The cable continued to be bolstered by growing hopes of US stimulus package, which if passed through will most likely improve prospects of the global economic recovery. The pound rose to a high of $1.3820 before ending the session at $1.3813.
Following a slight consolidation the previous day, the South African rand rallied on Tuesday against the dollar and other major currencies. The growing optimism around the $1.9 trillion stimulus package continues to boost EM’s and lift the demand for risky assets. The local unit fell to a five week low of R14.7109/$ before ending the session at R14.7234/$ on the day.
South Africa’s negotiations with Johnson & Johnson’s lead trial investigator continued yesterday, addressing the emergency processing of the vaccine for use in SA.
On the data front, locally we are empty today and internationally we have CPI Inflation data from the US and Germany amongst others. The local unit will remain vulnerable to development on the stimulus package and vaccine.
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