International

The dollar traded weaker against rivals yesterday, post-FOMC minutes gains relinquished as doubts creep in over the Fed’s readiness to tighten policy following differing Initial and Continuing Jobless Claims data weighing on one of the Fed’s recovery targets of improving on employment, especially when they are still supplementing unemployment benefits. The dollar index was at its lowest at session-end at 89.761

Euro bulls were steady yesterday, the single currency maintaining an upward trend intraday after the ECB eased fears of persisting higher inflation, the ECB regarding a spike in prices due to the reopening of the economy and a rebound in the services sector. The single currency peaked at $1.2228 and closed out at $1.2227

The pound was weaker in early session trade but managed to rebound as risk-appetite returned in the market following soft US data. Things are looking good for sterling, with positive data prints, lifting of restrictions, vaccine rollouts and alleviated post-Brexit uncertainties aiding sentiment. The pound was firm at $1.4192 and closed out the session.

ZAR

The Rand reversed Wednesday’s losses yesterday and breached the R14.00/$ level once again for the 6^th time this month. This time however, the local unit managed to close below the psychological level at a rate of R13.9747/$ after reaching a low of R13.9643/$.

The South African Reserve Bank’s Monetary Policy Committee decided to keep rates on hold yesterday with a unanimous decision. Reserve Bank Governor Lesetja Kganyago announced that the SARB’s model sees the potential for a 25bps hike in Q2 and in Q4 this year with the model showing the key rate at 4.07% at year end. Following the announcement, the ZAR strengthened and kept going after remaining range bound in the morning leading up to the announcement.

With the local releases behind us, focus shifts internationally to an array of sentiment releases today and these will likely be the main drivers today, keeping an eye out for any major headlines.

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.