International

The US dollar index came off its recent lows to end the week on Friday. Thanks to positive economic data, the greenback managed to end its losing streak on the day, with a significant upwards movement that we haven’t seen in weeks. The growth in personal income and spending, along with strong manufacturing numbers, reflects strong economic activities for March and improving the economic outlook for the world’s biggest economy. The dollar surged to a high of 91.322 before ending the session at 91.280.

The euro continued to come off its recent highs in the previous session, as the greenback was predominantly better bid on the day, on the back of strong economic data. Although dollar shots broadly rose to a month’s high, the greenback paused its downtrend on Friday, bolstered by improving economic activities. The single currency ended the week on the back foot, reaching a low of $1.2017 before ending the session at $1.2023.

The pound sterling also fell victim to the dollar’s recovery on Friday, wiping out a week’s worth of gains in just one session. The market will be looking out for the BoE’s rate decision later this week. The pound dipped to a low of $1.3803 before ending the session at $1.3819.

ZAR

The rand traded weaker on Friday, giving out to pressure on EM currencies as positive economic data for safe-haven countries, notably the US, eased risk appetite. The rand’s high of the day was R14.5063/$ and closed out the week and month of April at R14.4938/$.

Locally, the day and week ahead is relatively quiet, local economic data is not expected to have a big impact on sentiment. We anticipate the local unit to take direction from external indicators.

This communication (“this communication”) has been provided by the corporate and investment banking division of Absa Bank Limited a registered bank in the Republic of South Africa, a subsidiary of Absa Group Limited, with company registration number: 1986/004794/06 and with its registered office at: Absa Towers East, 3rd Floor, 170 Main Street, Absa Towers West, 15 Troye Street, Johannesburg 2001, Republic of South Africa (“Absa”). Absa is regulated by the South African Reserve Bank. Absa has provided this communication for information purposes only and you must not regard this as a prospectus for any security or financial product or transaction. This communication is from an Absa Sales and/or Trading desk and is not a product of the Absa Research department. This communication has not been produced, reviewed or approved by the Absa Research Department, and is not subject to any prohibition on dealing ahead of the dissemination of research. The views in this communication are not a personal recommendation and do not take into account whether any product or transaction is suitable for any particular investor. This message is subject to the terms and conditions at: http://www.absa.co.za/disclaimer. This communication is confidential and no part of it may be reproduced, distributed or transmitted without the prior written permission of Absa.

ZAR

The rand traded weaker on Friday, giving out to pressure on EM currencies as positive economic data for safe-haven countries, notably the US, eased risk appetite. The rand’s high of the day was R14.5063/$ and closed out the week and month of April at R14.4938/$.

Locally, the day and week ahead is relatively quiet, local economic data is not expected to have a big impact on sentiment. We anticipate the local unit to take direction from external indicators.

International

The US dollar continued on its path to recovery yesterday, almost getting back to where it was before Monday’s big fall. Recent strength on the greenback stems from risk off sentiment in markets as well as better than expected jobless claims data yesterday, indicating a recovery in the US jobs market. President Biden’s new capital gains tax proposal also aided the dollar in late afternoon trade yesterday. The dollar index reached a high of 91.419 ended the session at 91.333.

The euro fell during yesterday’s session as a result of a stronger dollar. Before the turnaround in late afternoon, the common currency had initially strengthened ahead of, and after the ECB’s policy decision where they decided to keep rates on hold. Although the euro briefly dipped below $1.2000 and reached a low of $1.1994, it pulled back and closed the day at $1.2015.

What goes up, must come down and yesterday Pound Sterling proved this as it successfully wiped the large gains made on Tuesday from the board. Where the stronger dollar was the initial driver of the move lower, it was the diminishing advantage that the UK has on vaccine rollouts that added to the decline as Europe catches up with faster rollouts and additional doses. The pound reached a low of $1.3824 and ended the day at $1.3839.

ZAR

The rand saw marginal declines yesterday, retreating to trade above R14.30/$ as delays in global vaccine distribution has uncertainties creeping back into the market. With significant currency moves on the back of yields, investors still await direction from major economies as interest rates continue to take focus, despite the ECB keeping rates unchanged last night. The rand closed us off just shy of R14.30/$ and R14.2941/$.

With no local economic events out today, expect global factors to drive market today.

This communication (“this communication”) has been provided by the corporate and investment banking division of Absa Bank Limited a registered bank in the Republic of South Africa, a subsidiary of Absa Group Limited, with company registration number: 1986/004794/06 and with its registered office at: Absa Towers East, 3rd Floor, 170 Main Street, Absa Towers West, 15 Troye Street, Johannesburg 2001, Republic of South Africa (“Absa”). Absa is regulated by the South African Reserve Bank. Absa has provided this communication for information purposes only and you must not regard this as a prospectus for any security or financial product or transaction. This communication is from an Absa Sales and/or Trading desk and is not a product of the Absa Research department. This communication has not been produced, reviewed or approved by the Absa Research Department, and is not subject to any prohibition on dealing ahead of the dissemination of research. The views in this communication are not a personal recommendation and do not take into account whether any product or transaction is suitable for any particular investor. This message is subject to the terms and conditions at: http://www.absa.co.za/disclaimer. This communication is confidential and no part of it may be reproduced, distributed or transmitted without the prior written permission of Absa.