International
The dollar retreated against its rivals giving back some of its previous gains, following dovish comments from the Fed’s chair, maintaining the outlook that elevated levels of inflation are merely transitory, and should ease in the following months. The dollar index touched a low of 92.349 and ended the session at 92.410.
The euro managed to recoup losses in yesterday’s session as investors made room for risk appetite following dollar weakness. The euro reached a high of $1.1838 to end the session at $1.1835.
Pound Sterling staged a recovery as the dollar retreated and was further bolstered by a rise in UK’s CPI figure. UK inflation rose to 2.5% its highest since August 2018, surpassing the BOE’s 2% target, hinting at possible tightening of the bank’s monetary policy. The pound reached a high of $1.3891 and ended the session at $1.3856.
ZAR
The local unit had a bumpy start in Yesterday’s session, but managed to come out of the woods to pull off an impressive recovery, finishing stronger on the back of broader dollar weakness, triggering risk-on appetite despite the unrest. The rand appreciated to a low of R14.4358/$ after depreciating to a high of R14.7875/$.
Retail sales came out better than expected, rising by 2.1% in May compared to a previous fall of 0.6% in April.
Today we are slightly heavy on the data cards, although we have nothing locally. Internationally, we have unemployment data in the U.K , CPI data in Italy and jobless claims in the U.S, amongst others. The rand is most likely going to be driven by developments in the current political unrest and other market moving global events.
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 remained on the front foot, rallying in yesterday’s session though with reduced momentum in response to the publication of the Fed’s meeting minutes which noted growing concern and uncertainty with regards to its monetary policy. The dollar index touched a high of 92.845 to end the session at 92.644.
The euro retreated, posting additional losses at the back of reduced risk appetite. As the ECB sets out to announce the results of its revised inflation target, the euro remained under pressure throughout the day. The euro touched a low of $1.1780 to end the session at $1.1789.
Pound sterling also endured more losses, as safe haven flows favoured the US dollar over the pound and remained a dominant factor throughout intraday trading. The pound touched a low of $1.3752 and ended the session at $1.3800.
ZAR
The South African rand traded firmer within a range in yesterday’s early session, but lost momentum intraday as investors waited on the side-lines ahead of the Feds minutes, to close the session at R14.3225/$ after reaching a high of R14.4125/$.
We don’t have any local data due to be released today and internationally we are expecting jobless claims data from the US. The local unit is most likely to remain a passenger driven by global factors.
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.
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