International

Following a pullback in the previous session, the US dollar index edged lower to kick start the week yesterday, with safe-haven assets such as gold also been squeezed out on the day, as global markets seemed risk on across the board. As the improving outlook on global economic recovery on the back of strong economic data and progress on the vaccine front continues to see flows into emerging markets and riskier assets, investors remain bearish on the greenback. The dollar slipped to a low of 89.763 before ending the session at 89.844

The euro got lifted yesterday, although the single currency still remained within range, with risk sentiment across global markets, as well as subdued US Treasury yields seeing the dollar trading under immense pressure on the day. The single currency rose to a high of $1.2228 before ending the session at $1.2175.

The pound sterling also managed to see some significant moves against the dollar on the day, benefiting from broader risk appetite and dollar weakness, although the cable consolidated to end the session slightly firm. The British pound initially reached a low of $1.4112, before rising to a high of $1.4171, and ultimately ending the session at $1.4155.

ZAR

The rand retreated yesterday, weakening back above the R14.00/$ level on the back of commodity price drops, but came back down again as dollar support faltered, benefitting riskier assets such as the rand, and sentiment boost from credit rating agencies keeping the country’s rating unchanged, predicting a stable outlook. Our local unit strengthened to R13.9042/$ and closed us out at R13.9175/$.

Despite rising local covid-19 infection rates, bets on a recovery are lifting rand sentiment as vaccinations are underway, commodity prices lend support, and local yields remain attractive. Unchanged credit ratings have removed an element of uncertainty in the short term, but how the economy performs, and political stability is maintained will certainly weigh on the coming ratings later in the year.

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.

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