International

The US dollar see-sawed in yesterday’s session, as the market digested contradicting information from the Fed, changing its tune on the hawkish stance. Ultimately, the dollar managed to end the day in the green, reaching a high of 91.902 and ending the session at 91.802.

The single currency rallied after the Eurozone printed an upbeat manufacturing PMI of 63.10, higher than market expectation. As a result, the euro reached a high of $1.1970 but was unable to hold onto these gains, ending the day in the red at $1.1926.

The pound posted gains for the third consecutive session this week ahead of the Bank of England’s policy meeting today, which is expected to provide direction on the inflation outlook going forward. The pound reached a high of $1.4001 and ended the day at $1.3964.

ZAR

The local unit managed to post some gains as the dollar retreated, along with a basket of its emerging market peers as the Fed’s chair watered down concerns over policy tightening. The rand strengthened to a low of R14.1352/$ and ended the session relatively firm at R14.2075/$

In line with market expectations, local CPI rose to 5.2% in May, its highest level in 30 months from 4.4% in April, slightly above the midpoint of the SARB’s 3% – 6% target range.  The main contributors to this surge in inflation being increased fuel prices in conjunction with increased food and non-alcoholic beverages prices.

On the data front, locally we have the release of PPI figures to look forward to while the focus internationally will be on the US initial jobless claims figures as well as the BOE’s interest rate decision.  We expect the rand to take its direction from these events today.

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.