ZAR 

The rand strengthened further yesterday, briefly crossing the R14.80/$ threshold as US inflation data disappointed, prompting further risk-on trades. EM currencies are finding reprieve after risk appetite had waned, as reflation fears take a backseat. The rand strengthened to R14.7874/$ and ended the session at R14.8182/$

South Africa’s current account printed a surplus for a second quarter at 3.7% as export volumes and prices exceeded imports, boosting rand sentiment for the day. Finance Minister Tito Mboweni mentioned in his speech that a current account surplus is unlikely to be maintained after South Africa printed a 5.9% surplus in Q3. With conditions in the early stages of normalizing as trade relationships improve, and South Africa being a net importer, the expectation is further pressures added onto the rand as the year commences as analysts anticipate a current account deficit in the next print.

With no local data out today, expect global factors to influence markets.

Expected ranges for the day:

• USDZAR: R14.8000 to 14.9500/$
• EURUSD: $1.1920 to 1.2000
• GBPUSD: $1.3940 to $1.4000

International 

The dollar declined further yesterday as risk sentiment strengthened and demand for haven assets and currencies declined. The signing of the COVID relief Bill by President Joe Biden yesterday boosted sentiment and sent stocks soaring along with it. The dollar index reached a low of 91.365 before ending the session at 91.420.

The Euro rose yesterday aided by the weaker dollar but also due to comments from the ECB that risks are more balanced now and decided to leave rates unchanged. The single currency reached a high of $1.1990 and ended the session at $1.1986.

Pound Sterling continued to take advantage of the weaker dollar, climbing to just below the $1.40 handle yesterday. The pound remains the strongest performing G10 currency against the dollar this year as optimism from the vaccine rollout keeps it buoyed. The pound reached a high of $1.3995 and ended the session at $1.3991.

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