The South African rand paused its sell-off against the dollar yesterday, bouncing back from an almost four week high the previous day, as investor’s appetite for certain EM’s slightly picked up in the day. The reported progress on the US stimulus front and the easing of global bond market sparked investors’ interest for risky assets, with the relaxation of lockdown regulations in South African to alert level one most likely aiding the rand further in the day. The local unit recovered to a low of R14.8982/$ before ending the session at R14.9983/$.
We have no local data due for today, or for the rest of the week for that matter, and such the local unit will most likely take its cue from global markets moving events and international data.
The dollar continued its uptrend yesterday, with the dollar index trading a three-week high of 91.136, allowing the dollar to outperform rivals as the Johnson & Johnson vaccine began distribution, positive manufacturing and construction spending data spurred further investor optimism over a US recovery, and as high US bond yield tolerance continues to grow. The dollar index ended the session at 91.045.
The euro slid further on Monday, despite positive German inflation data’s attempt to inspire a rebound. Rising Eurozone bond yields remain a concern for investors who feel the ECB should intervene through their bond-buying program but seem to have retreated for the time being. The single currency weakened to $1.2028 and ended the session at $1.2043.
The pound was downbeat yesterday, spending most of the day in consolidation, but weakening overall as dollar bets steal the spotlight. The pound still has potential to tick higher as efficient vaccine rollout, Brexit breakthroughs, and the BoE’s understatement of the possibility of negative interest rates lend support behind the scenes. The pound weakened to $1.3904 and ended the session at $1.3917.
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