International

A choppy Easter weekend for the dollar – the dollar index was weaker on Thursday, but still relatively high as fiscal stimulus and vaccinations are underway. Positive US employment data that came out on Friday saw the index recoup Thursday’s losses to ride the wave throughout the weekend, but lost ground on Monday as declining US bond yields sullied sentiment. The market may be changing how it responds to US data as it places the entire global economy’s recovery into perspective. The dollar index closed out Monday’s session at 92.517

The euro picked up where the dollar gave up to trade stronger on Thursday and the rest of the long weekend, and traded a seven-session high of $1.1821 on Monday. Despite the uptick, the euro faces massive downside risk as the Eurozone continues to battle the pandemic along with a lagging vaccination rollout. The single currency closed out Monday’s session at a high $1.1811

The pound was elevated on Thursday, benefitting from dollar weakness and positive UK PMI data. It continued to climb over the weekend, and reached a high $1.3912 on Monday despite thin market conditions as positive sentiment lent support. The pound closed out Monday’s session at $1.3903

ZAR

The past Easter Weekend was certainly not without action for the Rand, which managed to break through the R14.60/$ support level that it had been trying to break through for quite some time. Over the weekend the Rand reached highs and lows of R14.7216/$ and R14.5238/$ respectively before ending it all yesterday at R14.5548/$.

On Thursday the Rand continued its path, strengthening along with other currencies in the Emerging Markets basket as risk sentiment returned to the market following a few great economic data releases across the world. The strength was not enough to breach the R14.60/$ level though but the Rand closed the day before the long weekend very close to it at R14.6225/$

With Friday’s impressive release of Non-Farm Payrolls data out of the US, the rally emerging markets paused slightly as the dollar took back some gains, but due to limited trading activity with most of the world out on holiday, the move was not as aggressive as it could have been.

Finally, yesterday was the hero day for USDZAR, being the best performing currency against the dollar and smashing through R14.60/$ to reach a low of R14.5238 on return of improved risk sentiment, which is likely to spill over into today’s session.

On the day ahead, there is nothing on the cards for local data releases and in-fact, very little on the cards at all today and we expect the Rand to continue with the trend over the weekend, riding the sentiment wave and being driven by any major headlines.

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.

International

The dollar kicked off the week to a great start as risk sentiment shifted to the cautious side due to mounting concerns over hedge fund defaults, sending investors to havens. Upbeat US economic data as well as the COVID-19 vaccine rollout across the US being on track, or possibly even ahead of schedule, aided the greenback in its surge forward, allowing the dollar index to reach a high of 92.964 and ended the session at 92.944.

The euro pulled back and reversed the gains made last Friday due to declining risk sentiment and dollar strength, while concerns over the economic impact of a third wave of COVID-19 infections, and similarly lockdown restrictions, added fuel to the fire. The single currency traded at a low of $1.1761 just before ending the session at $1.1764.

The pound continues to show its resilience and maintains its position as the best performing G10 currency for the year as it surged forward in early trade. Most of the recent gains for pound sterling can be attributed to the faster vaccine rollout across the UK, with a total of 30 million adults already vaccinated. This despite the EU trying to cause a vaccine war with the UK, with Brussels threatening to stop the export of doses to Britain.  The pound rose to a high of $1.3847, before falling to a low of $1.3756 and ended the day only marginally in the red at $1.3763.

ZAR

The rand was range-bound for the better part of the day yesterday, teetering around R15.00/$ before picking a side and recovering against the dollar, despite increased dollar demand. The rand remains sensitive to US inflation speculative views that have caused the rand’s uncertain nature. Our local unit strengthened to R14.7835/$ and ended the session at R14.9117/$.

We look forward to German inflation and US consumer confidence data out today to influence EM currency direction 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.