International

A slow start to the week for the greenback. The market has digested the disappointing jobs data release and is now moving its focus to inflation concerns ahead of the US inflation data release on Thursday. This has put more pressure on the dollar with the dollar index reaching a low of 89.914 before closing the day at 89.950.

The euro continues to benefit from a weaker dollar ahead of the European Central Bank meeting where policy decision makers have held a dovish stance for some time now. It closed the session at $1.2190 after reaching a high of $1.2202.

Pound Sterling held firmly onto its gains, benefiting from a weaker dollar despite concerns on whether the Britain government will stick to its plan to lift Covid-19 restrictions in the UK next week as the third wave keeps this idea under threat. The cable traded at a high of $1.4190 and closed the session at $1.4183.

ZAR

The South African Rand gave back some of its gains to kick start the week on Monday, bouncing off from its multi-year low on the day. The rand weakened on the back of investor’s repositioning strategies ahead of domestic GDP data for Q1, which is due to be released today. The local unit rose to a high of R13.5386/$ before ending the session at R13.4900/$

South Africa’s GDP printed 6.3% QoQ and -4.1% YoY in the final quarter of 2020, and it is now expected to print at 2.5% QoQ and -3.2% YoY for Q1 2021 later today. Apart from our local GDP data today, we also have GDP data from the EU and Trade data from the US.

The local unit will most likely take its cue from local data today, and also track market-moving trends in global markets.

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 dollar closed the week on the back foot as a result of a disappointing Non-Farm payrolls data print, essentially erasing the gains made from Thursday’s upbeat jobless claims data. The dollar index reached a low of 90.026 and ended the session at 90.136.

The Euro bounced off the $1.21 level yesterday, ending the day in the green as the poor US employment report assisted in the move higher. The single currency reached a high of $1.2185 and ended the day at $1.2167.

Pound Sterling benefitted from the weaker greenback as well, pulling back from below $1.4100 and re-establishing itself in the range between $1.4100 and $1.4200 that it has been in for the last month. The pound reached a high of $1.4200 and ended the day at a rate of $1.4157.

ZAR

The South African rand continued to push its lower bound further to end the week on Friday, posting new lows in the process and testing 2019’s multi-years lows on the day. Along with other riskier assets, the local unit was bolstered by surging risk appetite in global markets, on the back of the most anticipated US Jobs data on the day, which contained concerns over interest rates. The rand fell to a low of R13.4092/$ before ending the week at R13.4346/$.

Tomorrow we expect South Africa’s first-quarter GDP numbers, which according to the Reuters Poll is expected to print at -3.2% YoY and 2.6% QoQ. While according to our research team, real GDP is expected to come out at 1.7% QoQ. Today we have Net and Gross Gold & Forex Reserve data locally, and internationally we have Industrial orders in Germany and Consumer Credit data in the US.

The local unit will most likely continue to track global markets and other market-evening events 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.