International

The dollar tracked lower yesterday, continuing Friday’s trend of giving up Wednesday’s inflation-spurred rise. Sentiment remains dampened as investors believe a rate-hike is not in the offing before September at least, despite higher inflation. Significant data releases and speeches this week are highly awaited to give direction. The dollar index reached a low of 90.149 just before closing off the session at 90.219.

The euro rallied mid-afternoon to a four-session high of $1.2167 as dollar negatives lent support briefly. It came off highs soon after, but maintained positive trajectory as sentiment is also buoyed by the bloc’s recovery and vaccination efforts. The single currency closed out firm at $1.2151.

The pound had a moment yesterday as the UK’s four-month COVID-19 lockdown was eased, the currency strengthening against the dollar to trade firmly above $1.4100. Sentiment is elevated this week as recovery prospects now seem solid. The pound strengthened to $1.4146 and ended the session at $1.4129.

ZAR

For the better half of the day yesterday, the Rand was locked in a range between 14.12/$ and 14.18/$ but when the New York trading session kicked off late yesterday afternoon, the ZAR managed to push a leg lower, dipping to a low of R14.0905/$ before ending the day at R14.0993/$.

The dip late yesterday afternoon came as risk sentiment shifted again and allowed risk assets and currencies some breathing room as the dollar fell. South African inflation figures tomorrow and the SARB’s rate decision on Thursday are still very much in focus for the local unit this week and consensus is that the SARB will keep rates on hold once again.

For the day ahead, UK employment figures and Eurozone GDP figures are top of mind and we expect the ZAR to continue riding the global sentiment waves ahead of our local events later this week.

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.

ZAR

For the better half of the day yesterday, the Rand was locked in a range between 14.12/$ and 14.18/$ but when the New York trading session kicked off late yesterday afternoon, the ZAR managed to push a leg lower, dipping to a low of R14.0905/$ before ending the day at R14.0993/$.

The dip late yesterday afternoon came as risk sentiment shifted again and allowed risk assets and currencies some breathing room as the dollar fell. South African inflation figures tomorrow and the SARB’s rate decision on Thursday are still very much in focus for the local unit this week and consensus is that the SARB will keep rates on hold once again.

For the day ahead, UK employment figures and Eurozone GDP figures are top of mind and we expect the ZAR to continue riding the global sentiment waves ahead of our local events later this week.

International

The dollar paused yesterday, halting its decline just before the index broke through 90.000. Following the sharp drop from Friday, the dollar carried the momentum into Monday but managed to pull back intraday with the dollar index ending the session flat at 90.212.

The Euro pulled back and gave up some of Friday’s gains yesterday, moving downwards since morning opened until the end of the session. The common currency reached a low of $1.2128 and ended the session at this low.

Pound Sterling surged ahead yesterday, registering a 1.01% gain yesterday when it reached a high of $1.4158. After breaching the psychological $1.4000 level in early trade yesterday, the pound continued ahead and showed no signs of stopping as it ploughed through the next big figure at $1.4100 as well. While momentum from Friday carried through, the move stronger was also as a result of positivity surrounding growth in the UK as Prime Minister Boris Johnson announced that the next stage of opening the economy will go ahead as planned now that two-thirds of the adult population have been vaccinated. The pound reached a high of $1.4158 but dipped back below to end the session at $1.4118.

ZAR

The South African rand continued to defy the odds to kickstart the week yesterday, returning to its pre-covid levels. The local unit breached the R14.00/$ mark in its early activities on the day, although intraday trades saw the rand slightly struggle for direction, as it retreated to trade the better part of the session above R14.00/$. The continued accommodation in global policy environment, broader dollar weakness, and rising commodity prices remain the main instigators of rand strength, along with the strength of other EM assets. The local unit strengthened to a multi-year low of R13.9573/$ before consolidating to end the session R14.0390/$ on the day.

Locally we have Manufacturing Production (M/M) data due for today, and internationally we have a few numbers coming out of Europe. The rand will most likely continue to follow global trends and other market moving events.

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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