International

The dollar made attempts at rebounding yesterday, succeeding late in evening after the US FOMC implied plausible rate hikes in the near future if economic recovery momentum heightens. There was also a general risk-off tone in the market yesterday, with cryptocurrencies taking a big knock, to the benefit of the safe dollar. The dollar index peaked at 90.281 and ended the session at 90.185.

The euro lost ground yesterday, trailing back below the $1.2200 level as investors took their profits. The Eurozone is looking at easing travel restrictions, boosting sentiment, but how the FOMC plans on moving forward may cap gains as dollar performance weighs heavily on the single currency. The euro peaked at $1.2244, faltered to a low $1.2159 and closed out at $1.2174.

The pound saw receding gains intraday. Losses were on the back of dollar developments, with sterling capped at $1.4200 as investors eye future indicators for the US. The pound closed out at $1.4113.

ZAR

The Rand dipped briefly below R14.00/$ again yesterday but just couldn’t hold on to it. When local CPI data printed slightly higher than expected, it pushed the local unit weaker kept this momentum throughout the day. The Rand reached a high of R14.1304/$ and ended the session at R14.1045/$.

Later yesterday afternoon, Retail Sales data for March surprised to the downside, spurring additional ZAR weakness. Retail Sales declined 2.5% YoY where market consensus expected a 1.9% growth. These releases paved the way for expectations to firm up on today’s MPC interest rate decision. Market participants, along with Absa Research, expected the SARB to keep rates on hold and this view has really just solidified following the data releases and we don’t expect any surprises during today’s meeting.

Other releases for the day include German PPI and US Jobless Claims data and while these may particularly have some swing and drive on the ZAR, the spotlight really is on MPC and their comments after the decision.

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 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.