International

The greenback was set to post a second day of gains after its massive fall on Monday but afternoon trading turned it on its head and the dollar ended the session in the red once again, albeit only slightly. The dollar index used the previous day’s momentum to reach a high of 91.428 before declining to reach a low of 91.086 and ended the session at 91.155.

The euro posted a second flat day yesterday, although this time it had initially weakened before cutting losses to end the day neutral. The euro could be taking the ‘wait and see’ approach to the extreme as we await the ECB’s decision on rates policy. The common currency reached a low of $1.1999 and closed the day flat at a rate of $1.2035.

Pound Sterling also carried through the previous day’s momentum into the morning session yesterday, slipping below the $1.3900 level ahead of UK inflation data. The pound managed to pare back some losses, despite a higher inflation print but still ended the day in the red. The pound reached a low of $1.3886 and ended the day at $1.3931.

ZAR

The rand was little moved yesterday, trading within a very tight R14.22/$ – R14.33/$ range, but closing out the day firm nonetheless to come off from Tuesday’s highs. Local inflation data printed as expected at 3.2% YoY, barely inciting a change in the day’s sentiment. There’s little inflation pressure to prompt any interest rate hikes, but investors appear optimistic with the rand still trading below R14.50/$. We remain sensitive as investors await external factors to set the market’s tone, but our attractive yields are keeping us buoyant in the interim. The rand closed us out at R14.2408/$.

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

Demand for haven currencies, and particularly, the dollar continues to dwindle, and the greenback found itself falling further from grace yesterday. The dollar index fell more than half a percent yesterday on improved risk sentiment and a strong rebound on the euro, reaching levels last seen at the beginning of March this year. The dollar index reached a low of 91.034 and ended the session at 91.069.

The euro surged forward yesterday aided by the shift in sentiment but more specifically due to additional support for the common currency due to an increased rate of vaccine rollout across the Eurozone as well as the acquisition of additional doses. The single currency reached a high of $1.2048 and ended the session at $1.2037.

Pound Sterling with a phenomenal day yesterday, strengthening 1.11% on the day to attempt to break the $1.40 level, but fell just short, reaching a high of $1.3993. The pound continues to show its resilience and strength, leaping two-fold when the opportunity arises. The pound ended the day yesterday at $1.3986.

ZAR

The rand managed to recover some of Friday’s losses yesterday, still benefitting from subdued US Treasury yields as investors flock to the local unit’s attractive yields. Commodity prices have also been lending support in the EM space, as global trade conditions improve. The rand was strong at R14.1669/$ on the day but ended the session at R14.2144/$

The rand may have more room to strengthen further if current EM currency drivers remain forefront for investors. The receding nature of US Treasury yields has the rand eying the psychological R14.00/$, with last week’s test at R14.1394/$ a sign of this, and a break below the R14.10/$ a potential accommodation. Local fundamentals have little impact on the rand’s current direction, but this remains our local unit’s Achilles heel.

We look forward to CPI data out tomorrow for colour on the local economy, but have nothing on the local data card for 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.