The US dollar pulled off an astounding performance in Friday’s session, touching levels we haven’t seen in four months, on the back of rising bond yields triggered by recent headlines that the Feds preferred inflation measure showed a continuous price rise, accelerating beyond its target range of 2%. Although, the dollar started the week softer and reversed some of its gains from in yesterday’s session as the market waits in anticipation, for the Feds meeting this week. This will finally shed some light and give direction as to what the verdict is as far as asset purchase tapering is concerned. The dollar closed the session at 93.8790 in yesterday’s session and reached a low of 93.858.
The euro recouped some of its losses in yesterday’s session, starting the week stronger after suffering a major set- back in Friday’s session on inflationary concerns. The weighted inflation data in 19 countries sharing the single currency, surpassed market expectation coming in at 4.1% compared to market consensus of 3.7%. The common currency closed the session firmer at $1.1608 in yesterday’s session.
As for the pound, it continued its losing streak into the new week, as it remained pressured by the bank of England’s policy stance and ongoing concerns surrounding the Brexit predicament. The sterling closed the session at $1.3662 in yesterday’s session after reaching a low $1.3644.
The South African rand weakened on Friday for a 4th consecutive session, with domestic markets closed for local elections. Although the dollar was lagging on the day, the local unit traded under immense pressure in global markets, on the back of anticipated outcomes from the elections, along with power outages, amongst other things. The rand closed at R15.2038/$ before it depreciated to a high of R15.3265/$.
The trade balance data printed at 22.24 billion on Friday, after printing at 42.40 billion prior. On the local front, we have the election results that will be fed throughout today. Internationally, we have an array of data releases lined up for today from the U.S. and the eurozone. The rand will most likely take its cue from local and global events.
Expected ranges for the day:
- USDZAR: R 15.3500/$ – R15.6000/$
- EURUSD: $ 1.1585 – 1.1630
- GBPUSD: $ 1.3600 – 1.3700
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