ZAR 

The South African Rand continued to nurse some more losses on Friday, following a sharp rise in the previous session, on the back of a stronger dollar. The local unit’s previous rally continues to fade, with weeks’ worth of gains being eroded in the process. The recent spike in US Treasury yields underpins broader price movements in global markets, with most EM’s feeling the squeeze and the pressure. The rand rose to a high of R15.1924/$ and dipped to a low of R14.8021/$ before ending the session at R15.0926/$.

On Friday, data showed a decline in South Africa’s trade surplus from R33.06 billion in December to R11.83 billion. This came after exports slipped by 13.%, while imports saw an increase of 4.2%. Also on Friday, data showed that growth in private sector credit has narrowed from 3.55% to 3.26 YoY.

Last night during his address, the President announced that the country will be moving to alert level 1. Where curfew will now be between 00:00 and 4:00 am, with regulation on gathering and alcohol eased, amongst other things. He further outline on the country’s progress on the vaccination front, along with plans to ensure more success in vaccinating the nation.

We are a little short on the local data card today, although internationally we have an array of data due for the today. The rand will most likely continue to follow global markets trends today.

International 

The dollar was firmer on Friday as positive consumer spending data urged dollar demand. Coupled with higher expected inflation that continued to push Treasury yields higher, and overall optimism around a rebound in the US economy, gave a needed sentiment boost, allowing the once beaten dollar to conclude the week on a positive note. The dollar index reached its session peak and ended it at 90.959.

The euro came off Thursday’s highs, trading lower intraday with multiple failed attempts to bounce off support levels to stage a rebound. Contrary to what is happening to the dollar, the euro lost ground as a result of rising yields as the ECB’s bond-purchasing program was meant to reduce the cost of borrowing during the pandemic, but the Eurozone is set for its biggest bond yield uptick in three years, with the single currency feeling the brunt of a lack of investor support. The single currency weakened to $1.2061 and ended the session at $1.2069.

The pound traded weaker on Friday as investors partook in profit-taking as the currency traded too close for comfort to its 2018 post-Brexit level. The pound recently saw gains on the back of rising UK government yields as recovery optimism grew, but the BOE’s warnings about rising inflation pressures and recent dollar strength, support fell through for sterling. The pound weakened to $1.3887 and ended the session at $1.3928.

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