International
The US dollar index edged higher on the day, trading at a two-week high during the session, although the greenback struggled to maintain its gains, consolidating to end the session slightly flat. Soon after reaching a high of 90.441, the greenback came under immense pressure, on the back of month-end flows, rising inflationary pressure, and trader’s strategies ahead of the US holiday. The dollar ended the session relatively flat at 90.031.
The euro found some reprieve on the day, after retreating to a more than one week low in the session. The US economic data, which pointed out to inflationary pressure, along with prospects of more stimulus from US, picked up the single currency from a low of $1.2134 on the day, before consolidating to end the session flat at $1.2190.
The pound sterling capped its losses on the day, managing to pick up momentum from a low of $1.4137, as the dollar came under immense selling pressure on the day. The cable pulled back, erasing more than half its losses on the day, before ending the session at $1.4185.
ZAR
The South African rand started the session marginally weaker on Friday, opening the session at R13.7617/$ ahead of the U.S inflation data release, trading slightly firmer for the latter part of the day. However, the local unit struggled to hold on to its marginal gains, as it consolidated to end the session flat at R13.7579/$.
Sedated end to the week after the rand’s astounding performance boosted mostly by risk-on sentiment driven by bets that the U.S will operate in a low interest rate environment for long, despite concerns over rising inflation.
In other news, President Cyril Ramaphosa adjusted the country to alert level 2, following an increase in Covid-19 cases in the past few weeks, also pleading with fellow South Africans to avoid social gatherings as they are the biggest cause of infections.
On the data front, we have Trade data locally, and internationally we have CPI from Germany and Italy. The US markets and UK will be closed for holidays today, as such we expect limited flows on the day.
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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