International
The dollar fell on Friday at the hand of US Nonfarm Payroll data. Consensus was for the US economy to add just short of 1 million jobs in April when in reality it only added about 266,000, causing the dollar to falter drastically. The dollar index reached a low of 90.191 before ending the session at 90.233.
The Euro strengthened 0.84% on Friday as comments from the ECB initiated a move higher in the common currency and the US Nonfarm Payroll data just sealed the deal, sending the Euro to levels last seen end of February. The common currency reached a high of $1.2171 and ended the session at $1.2166.
Pound Sterling too strengthened on Friday, aided by the weaker dollar and found itself testing the $1.4000 level for the fourth time since falling below it at the end of February. The pound reached a high of $1.4006 but dipped back below to end the session at $1.3984.
ZAR
The South African rand traded soft in its early activities on Friday, as investors were positioning themselves ahead of the US jobs data and Moody’s credit rating report on the day. Intraday trades saw the tide turning on the back of disappointing US data, which saw the local unit extending its reach for a 3rd consecutive session, and breaching the R14.30/$ mark to trade at a year’s low. The decision by Moody’s not to publish their report most likely aided the rand as well. The rand firmed to a low of R14.0434/$ before ending the session at R14.0541/$.
South Africa’s net foreign reserve came out at $51.504 billion, compared to $50.877 billion in April, while the gross reserves printed at $53.689 billion compared to $52.995 in April.
Locally we are empty on the data front today, and internationally we only have House prices data in the UK and Business Survey data from the EU. The local unit is most likely going to continue tracking global events and sentiment.
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 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.
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