International

The dollar traded stronger, reaching a 3-month high as safe-haven demand continues to be a driver.  All eyes are on the US Non-Farm Payrolls data release, markets anticipate a gain of 700 000 jobs and an unemployment rate of 5.7%.  The dollar index reached a high of 92.601 and ended the session at 92.597.

The euro continued its downward trajectory after a short-lived recovery in the session, which might be a sign that the market still expects some downside pressure.  The euro reached a low of $1.1838 to end the session at $1.1846.

The pound was also on the back foot against its rivals following broad-based dollar strengthening and BOE’s governor’s sentiments, that the rise in inflation is no cause for panic but merely temporary, in the current climate where markets are still under pressure due to Covid-19. The pound reached a low of $1.3753 to end the session at $1.3764.

ZAR

A turbulent start to the second half of the year for our beloved currency, as it weakened sharply to a high of R14.4775/$ after breaching a R14.4000$ handle, as the bull-headed delta variant continues to erode sentiment globally, triggering a flight to safety.

Looking ahead, the rand is likely to remain pressured as investors are concerned about the new variant and possible extended restrictions in other countries.

Not much on the data front, locally we have business confidence and the non-farm payrolls in the U.S.

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 index edged higher in its late activities, ending the slightly firm after recovery from its earlier losses. Personal consumption expenditures (PCE)  figures most likely weighed in on the dollar in the session,  which printed 0.5% higher in May, although is still below market expectations of 0.6%.  The dollar index touched a high of 91.877 ending the session steady at 91.851.

The euro erased some of its earlier gains after a short lived rally following the PCE figures.  The euro  retreated  from its weekly highs to a low of $1.1924 before ending the session at $1.1933.

The pound was also on a downward trend and remained subdued throughout the day as markets continue to digest BOE’s comments.  Despite renewed optimism on Brexit issues,  the rapid spread of the UK Delta variant and delayed economic reopening continue to weigh on the pound.  The pound reached a high of $1.3935 to end the session weaker at $ 1.3877.

ZAR

The South African rand finished the week stronger, returning to its winning ways, benefitting from a weaker dollar environment associated with uncertainty surrounding inflation concerns in the U.S. The rand impressively appreciated to a low of R14.0200/$, the strongest we have seen in the week and closed off the week at R14.1275/$.

President Cyril Ramaphosa held a family meeting last night and addressed “Fellow South Africans” moving the country to adjusted level 4, and to be further reviewed in 14 days. He raised concerns about the new variant, appealing to fellow South Africans to follow public health regulations to help curb the spread.

Locally, we are clear on the data front and Internationally, we are expecting a release of inflation figures in Germany. The rand is most likely to be pressured this week given the surge in the new variant.

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.