International

The US dollar index continued to retreat further on the day, tracking around its four and a half month low in the session. The likely hood of the US Fed continuing with its current policy trajectory, along with soft consumer confidence data, kept the dollar on the back foot. The struggling greenback, along with subdued Treasury yields, saw the precious Gold peaking on the day. The greenback slipped to a low of 89.535 before ending the session at 89.639.

The euro rose on Tuesday, trading at highs last seen in January, as the greenback continued towards its lows for the year, amid extended dollar weakness and the Fed’s outlook. The single currency rose to a high of $1.2265 before ending the session at $1.2221.

The pound sterling had a fairly volatile session, with big sideway moves seen on the day. The pound was tracking firm in its early activities yesterday, although intraday trades saw the cable losing momentum and struggling to maintain its gains, and ultimately erasing all its earlier gains on the back of disappointing economic data. The cable rose to a high of $1.4210 before dipping to a low of $1.4116, and finally closing the day at $1.4149.

ZAR

The rand traded stronger against the dollar intraday, trading its strongest in close to two years yesterday, benefitting from risk-on sentiment as global factors favour high-yielding assets. Improvement in commodity prices, and Eskom’s announcement that they have reduced their R484-bn debt by 20% boosted local sentiment as our local unit maintained its trend for strength. The rand was firm at R13.8122/$ and closed out the session at R13.8541/$

The event calendar is thin today, with neither local nor external data to look forward to. Something to look out for is the price of gold, trading above the $1,900 psychological level as dollar weakness lends support, as well as other commodities as they face non-typical price fluctuations, contributing to rand volatility.

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 US dollar index saw a significant pullback yesterday, recouping two session’s worth of losses on the day. The greenback found some reprieve on the back of the Fed’s unwavering support towards economic recovery and their view on subdued policy environment and inflation. The dollar rose to a high of 90.109 before ending the session at 90.109.

The euro opened the session firm on the day, tracking higher in its early activities, although intraday trades, along with the opening of the US session saw a drastic shift in appetite, which saw the single currency relinquishing all its earlier gains on the back of a rising dollar. With dovish remarks from the ECB’s board member also weighing on the pairs moves. The euro retreated to a low of $1.2187 before ending the session at $1.2193.

The pound sterling retreated further on the day, eyeing its latest support levels, on the back of an aggressive dollar on the day, with COVID-19 jitters also keeping the cable subdued. The British pound fell to a low of $1.4113 before ending the session at $1.4121.

ZAR

The rand has been doing a stellar job over the past few sessions, extending gains against the dollar to trade a 27-month best below the R13.80$ threshold as unappealing US returns, weighed by further comments from US Fed officials about the persistence of ultra-easy policy, boosted high-yielder sentiment. The rand was firm at R13.7394/$ on the day and closed out at R13.7492/$

Local PPI data will kick us off  on the data front today, although no significant rand movement is expected from the day’s print. We anticipate global factors to influence and drive sentiment.

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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