The Rand seems to have struggled to stick to a direction over the last couple of sessions as ‘Turnaround Tuesday’ struck again yesterday with the ZAR recovering back to the R14.50/$ levels after trading above R14.90/$ on Monday. The Rand reached a low of R14.5318/$, before closing the day at R14.5418/$.
Strength yesterday was despite a poor unemployment data print for Q4 where unemployment rose to a record 32.5%, almost a third of SA Labour Force. The Rand’s saving grace yesterday was US Federal Chair Jerome Powell’s comments that the US economy would need continued support for quite some time, hurting the dollar to the benefit of the local unit.
Hardly any data releases due today globally and we’re expecting a subdued day today ahead of the Budget Speech from Finance Minister Tito Mboweni. Thereafter, depending on what is said, the currency could either get a boost of strength, or fall drastically if the plan is unclear on the route out of SA’s debt crisis.
Despite facing multiple headwinds and tracking down to a six-week low in the session, the greenback managed to end the day firmer after the market internalized Jerome Powel’s testimony. In his testimony, he pointed out that the Fed is not looking to change their position on the current monetary policy accommodation, and they are most likely to continue on that path till sustainable recovery is on sight, despite rising bond yields. The dollar index rose to a high of 90.264 before ending the session at 90.169.
The euro paused its uptrend yesterday, giving back some gains on the back of a firmer dollar. The dollar found some support, following Jerome Powel’s comments, which eased tensions in global markets regarding concerns over rising interests. The single currency retreated to low of $1.2137 before ending the session at $1.2150.
Pound sterling continued to challenge its April 2018 highs once again, undermining the greenback’s broader recovery, along with the market’s sentiment regarding the Federal Reserve Chairman’s comments. Markets seem to really believe that the effective vaccine rollout in the UK will soon return the British economy to the promise land of better economic outlook. The cable rose to a high of $1.4117 before ending the session at $1.4112.
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