International

A firm start to the week for the greenback but it failed to hold momentum, and was seen giving up some of its gains from last week as investors wait on the sidelines to get further direction from the Fed. Jerome Powell is scheduled to address congress today and the market is expecting to get further clarity on the hawkish signals that saw the dollar strengthen last week. The dollar index closed the session at 91.899 after reaching a low of 91.829.

The euro benefitted from the dollar’s weakness despite European politics having added pressure to the single currency. It closed the session at $1.1915 after reaching a low of $1.1846

The pound showed a clean pair of heels in yesterday’s trade, finding some reprieve and reversed all of Friday’s losses, boosted by the dollar’s weakness, despite rising Covid-19 cases across the UK. The pound reached a high of $1.3936 and closed the session at $1.3929

ZAR

The South African Rand started the week on a positive note and managed to recoup some of Friday’s losses as the recent dollar rally dissipated through intraday trading.  The Rand strengthened to a low of R14.2021/$ to end the session off at R14.2296/$.

Investors focus will be on Wednesday’s data release of consumer and producer price indices and as we grapple with the firm grip of the Covid-19 third wave and threats of possible harsher lockdown restrictions in some provinces, the rand will most likely remain under pressure.

We are thin on data locally and internationally and we expect the Rand to take direction from international headlines.

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.