International

After dipping to a four-month low, the greenback managed to pull back, erasing its earlier losses and also taking back some of its previous session’s losses. Although the dollar ended the day firm and was tracking stronger against most majors, on a weekly overview, it traded under immense pressure and was maintaining losses. The main themes driving the dollar were tapering talks, strong commodity prices and COVID-19 induced concerns. The greenback rose to a high of 90.154 before ending the session at 90.017 on the day.

The euro lost ground to close the week on the back foot on Friday, giving back all its previous session’s gains on the back of dollar stronger dollar on the day, and strong economic data from the US. Although the single currency tracked lower on the day, it was still trading within a week’s range. The euro slipped to a low of $1.2162 before ending the session at $1.2185.

The pound sterling edged higher on Friday, despite broader dollar strength on the day. The cable was supported by positive domestic economic data, which painted an improved outlook on the UK’s economic trajectory. The pound rose to a high of $1.4009 before ending the session at $3819.

ZAR

The Rand was firmer on Friday, winning the battle of trading below the R14.00/$ psychological level, trading its strongest in 18 months at R13.8895/$ following Thursday’s SARB announcement to keep the repo rate unchanged at 3.5%.

Our local unit retraced gains in the evening as investors awaited credit rating reviews from S&P Global Ratings. South Africa’s long-term foreign currency and local currency debt ratings were left unchanged with a stable outlook, and the rand was steadfast, closing out the session and week firm at R13.9317/$.

Today’s event calendar is quite thin, with no local data out today. The rest of the week is set to also be muted, with local PPI data out on Thursday. We anticipate global drivers to influence the tone for our local currency 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.

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.