The rand found some reprieve yesterday, retracing nearly 30c to the dollar to trade back down to the R15.30/$ level as positive local GDP data, and a move by investors to higher yielding assets lent support. Our local unit strengthened to R15.2700/$ and ended the session at R15.2891/$
Positive SA GDP data pulled off a great feat yesterday, printing above expectations at 6.3% QoQ, -4.1% YoY, and -7% for 2020 overall. Although the 7% contraction is above forecasts, it is still the worst annual print in 70 years. Despite this, the figures are still a good reflection of the impact the easing of lockdown restrictions has had, fueling further optimism around a global economic recovery as trade and movement channels continue to open back up.
Not a lot of economic event activity scheduled for the day. Investors will look to US CPI data set to be released in the afternoon, with some volatility to be expected around the time. We anticipate global factors to drive markets.
Expected ranges for the day:
- USDZAR: R15.2500 to 15.4500/$
- EURUSD: $1.1831 to $1.1920
- GBPUSD: $1.3800 to $1.3935
The dollar rally abruptly ended yesterday, giving commodities like gold and oil the opportunity to stage a recover. The dollar completely wiped out the gains it had made on Monday. The dollar index reached a low of 91.907 before ending the session at 91.958.
The Euro managed to end its decline as well, reversing Monday’s losses on the back of a weaker dollar as well as a GDP print that was slightly better than consensus. The European economy shrank 4.9% over 2020 according to the latest data release. The single currency reached a high of $1.1916 and ended the session at $1.1901.
Pound Sterling took full advantage of the weaker dollar yesterday, posting gains that not only erased Monday’s losses, but Friday’s too. Vaccine rollouts across the UK continue to drive optimism that live may soon return to normal, and therefore economic activity to return along with it. The pound reached a high of $1.3925 and ended the session at $1.3892.
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