ZAR

The Rand turned around yesterday, moving back below the R15.00/$ level but staying in that 20-cent range once again as expected. The Rand reached a low of R14.8318/$ before ending the session at R14.8639/$.

The R14.80/$ level on the downside will prove tough to break once again, especially when there is a lack of data to drive the Rand through it. Our first and only bit of data for the week is the release of January Retail Sales figures tomorrow, where Absa Research is expecting a MoM and YoY decline to be printed. This release may put some upward pressure on the Rand, making it even harder to believe a sustained break below R14.80/$ is possible in the short term.

The move stronger yesterday was despite further strength on the US dollar, and the winners across the board yesterday were all emerging market currencies – with only 9 currencies stronger vs the dollar on the day.

On the data cards today, mostly US data later this afternoon which may stir things a little ahead of the US Fed meeting tomorrow evening. For now, the Rand will continue to follow sentiment, headlines and global trends in its moves.

Expected ranges for the day:

• USDZAR: R14.7500 to 15.0500/$
• EURUSD: $1.1905 to $1.1965
• GBPUSD: $1.3850 to $1.3950

International

The US dollar index advanced further on Monday, booking more gains against rivals ahead of the Fed meeting tomorrow where sentiment is that they will most likely leave the benchmark rate unchanged. The US Treasury yields paused their rally yesterday as a result, coming off recent highs, although the progress on the stimulus front, coupled with the expectation of recovery, continue to see inflationary pressure on the rise. The greenback rose to a high of 91.965 before ending the session at 91.833 on the day.

Euro demand remained subdued, nursing some losses for the second day, as the greenback continued to maintain high levels ahead of the Fed’s policy meeting. Although yields took a breather on the day, the dollar broadly remained elevated, as investors appear to be positioning themselves. The single currency fell to a low of $1.1912 before ending the session at $1.1930.

Pound Sterling also succumbed to dollar strength on the day, trading sideways for most of the session, before ending the day relatively flat, with lingering evidence of downside pressure. The Bank of England is also expected to have a meeting for its benchmark rate decision this week. The governor of the BoE expressed his optimism on the economic outlook, also pointing out that he does not anticipate an unprecedented increase in inflation. The cable slipped to a low of $1.3854 before ending the session at $1.3895.

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