International

The US dollar index slipped in its early activities on Monday, although the greenback managed to see a pullback, to cap its downside. Inflationary pressure in global markets continued to see a rise in gold prices, while keeping dollar flows subdued. The US markets were closed yesterday, in celebration of Memorial Day. The dollar fell to a low of 89.816 before ending the session at 90.031

After consolidating for two consecutive sessions, the euro finally made a decisive move upwards, despite the region’s uncertainties regarding its path to economic recovery. The single currency was aided by broader dollar weakness, along with limited dollar flows as the US was closed. The euro rose to a high of $1.2231 before ending the session at $1.2228.

The pound sterling took advantage of a struggling dollar as well, with London also closed on the day, in celebration of Spring Bank Day. Except for inflationary pressure, we also have trader’s strategies ahead of the US’s employment data putting pressure on the dollar. The cable rose to a high of $1.4219 before ending the session at $1.4215.

ZAR

A firm start to the week for the local unit, with the rand edging lower, to levels last seen in February 2019, also continuing to shrug off growing concerns over the third wave of COVID-19. Thin liquidity and limited dollar bets, due to the US been closed for Memorial Day most likely aided the rand. The rand reached a low of R13.7088/$ before ending the session at R13.7183/$, with lingering strengthening bias.

South African trade data was released yesterday, showing a surplus of R51.24 billion compared to the market consensus of R31 billion.

We are slightly heavy on the data front today. With unemployment numbers from the EU and Germany, GDP data from Italy, and Manufacturing data from the US, amongst others. The local unit will most likely continue to track international data and other market-moving events.

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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.