International

The dollar strengthened yesterday, surging as jobless claims data fell to the lowest they’ve been since the COVID-19 pandemic began, indicating a strong uptick in hiring and therefore economic activity in the US. An increase in the number of Americans targeted for vaccines in the first 100 days also boosted sentiment in the US. The dollar index reached a high of 92.917 and ended the session at 92.848.

The euro fell for a third consecutive session as woes over extended lockdowns and the effect they will have on the European economy surfaced again. Cases of COVID-19 are spiking again in European countries as the third wave of the virus has officially hit shores. The single currency traded at a low of $1.1762 just before ending the session at $1.1764.

The pound displayed its resilience once again yesterday as it recouped Wednesday’s losses despite the stronger dollar and a falling Euro. The pound rose to a high of $1.3745 just before ending the session at $1.3734.

ZAR

 The Rand had another volatile session yesterday but ultimately ended the day slightly weaker. The Rand reached highs and lows of R15.0969/$ and R14.8596/$ respectively before ending the day at R15.0184/$.

In a unanimous decision yesterday, the first in a while, the SARB’s Monetary Policy Committee decided to keep interest rates unchanged, with Repo at 3.5% and Prime at 7%. The SARB’s Quarterly Projection Model does indicated that 2 hikes of 25bps are expected over the rest of 2021, one taking place in Q2 and the other in Q4.

With the SARB’s decision and Inflation releases behind us – we are now once again susceptible to moves driven by global headlines and data releases as the only noteworthy release for us over the next week is local Trade Balance data.

Among the data due for release today is an array of sentiment data for the EU and US as well as Retail Sales data for the UK – The Rand will likely take direction from these shifts in sentiment and any surprises in the data releases.

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.