International
As risk sentiment continued to lead markets away from safe-haven assets and currencies, the dollar resumed its fall on Friday, reversing the previous day’s gains and dropping even further to have the dollar index dip below the 91.500 level to a low of 91.486. The index ended the session at 91.671.
Aided by the weaker dollar and improved risk sentiment, the Euro strengthened on Friday, managing to only reverse the losses from Thursday’s session as the $1.2000 level seems tough to crack yet again. The single currency reached a high of $1.1995 and ended the session at $1.1983.
Pound Sterling initially crashed on Friday, wiping out the entire week’s gains in a matter of 30 minutes as market participants digested changes to UK and US rate forecasts. However, as the day progressed, the pound took back what it had lost and surged ahead to close the day in the green, posting a full week of gains. The pound reached low of $1.3717 in the morning before turning the tide and reaching a high of $1.3842 and ending the day at $1.3832.
ZAR
The Rand relinquished some of the week’s overwhelming gains on Friday, to trade weaker after trading a strong R14.1534/$ in very early session trade when stabilizing US yields spurred on global risk appetite at the time. With Rand strength largely on the back of diminishing safe-haven demand, although positive outcomes lie in wait if risk-on sentiment persists, our local unit remains vulnerable to a significant risk reversal as domestic factors offer little support as investors wait for direction from external factors. The Rand closed out the session weaker at R14.3043/$
The trading day is poised to be quiet with no event risks on the calendar. We anticipate global factors to drive markets.
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.
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