ZAR 

The Rand seemed to be on a one-way track yesterday as the day started, hurtling weaker at a rapid pace by as much as 1.6% to reach a high of R14.9254/$. However, after 3pm local time as the US came in for trading, the Rand reversed all its losses, aided by a weaker dollar, to end the day flat at R14.6734/$.

Yesterday’s pressure on the Rand was once again derived from the upcoming Budget Speech from Finance Minister Tito Mboweni on Wednesday. The Finance Minister must commit to a reduction in spending and outline plans to do so in order to curb the debt-to-GDP ratio, while also maintaining a fine balance in injecting funds to reignite the economy.

In terms of data ahead on the day, we have Unemployment data for Q4 due at around 11:30 which is likely to shed some light on how SA is recovering from the initial lockdown in its labour market. Further than that, the Rand is likely to keep taking direction from global events and headlines while continuing to keep tomorrow’s budget speech top-of-mind.

International 

The US dollar index kick started the week on the back foot on Monday, tracking at a 5-week low, with precious metals continuing to enjoy most safe-haven flows. Several factors underpin the recent dollar weakness, with improving economic prospects of its rivals, progress on the vaccination front, progress in the stimulus package, and investors expectation of the US’s efforts to safeguard the world’s largest economy being amongst those factors. The greenback fell to a low of 89.995 before ending the session at 90.010.

The euro tracked higher for a third consecutive session on Monday, as the greenback continued its sell-off against rivals on the day. The US economy remains very fragile with the expected US stimulus inciting concerns over inflationary pressure across global markets. The single currency rose to $1.2167 before ending session at $1.2156.

Pound Sterling extended its rally on Monday, continuing to lead the pack against the greenback and challenging its April 2018 highs. The UK’s improving economic outlook on the back of the vaccination rollout progress, along with broader dollar weakness, lifted the cable. Pound sterling rose to a high of $1.4086 before ending the session at $1.4064.

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