International

The dollar initially surged ahead yesterday with the index launching to a high of 90.246. However, as the day progressed, the dollar could not hold onto its gains, faltering as risk sentiment and appetite for commodity currencies increased. The dollar index ended the session at 89.909.

The Euro fell yesterday, initially losing almost 7-days’ worth of gains in the morning but managed to pull back all the day’s losses and end the day relatively unchanged. The single currency reached a low of $1.2164 and ended the day at $1.2211.

Pound Sterling pushed hard yesterday, allowing it to come back from morning losses and post gains in the afternoon. Although the UK has almost returned to full operation after the pandemic, the third wave is threatening to destroy much of what has been rebuilt in cable gains. The pound reached a high of $1.4183 and ended the day at a rate of $1.4171.

ZAR

The South African Rand showed some resilience in yesterday’s trade after suffering a minor setback, staging a remarkable recovery testing levels we haven’t seen in two years, firming by 1.27% on the day. the local unit traded at a low of R13.5040 and ending the session at R13.5117.

The rand continues to benefit on the back of a surge in commodity prices and global factors mainly being the U.S interest rates as it supports carry trade from an investment point of view combined with higher yields.

On the data front, we will be mainly focusing on the U.S weekly jobless claims and the ADP report, we are expecting 390k for the former and 650k for the latter.

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.