The dollar extended further losses in Friday’s session, trading weaker against a basket of its rivals as dollar demand declined following a dip in US Treasury yields and as Chinese Evergrande woes and the anticipated increases in US interest rates continue to plague the market. The dollar index fell to a low of 93.988 to finally end the session at 94.035
The euro was little changed and traded sideways throughout the day despite a weaker dollar and found little support from the release of the Eurozone core CPI index, which rose 1.9% in line with market expectations. The consumer price index printed at 3.4%. The euro ended intraday trading flat at $1.1594/$ after reaching a high of $1.1607/$.
The pound ended the week on an upbeat note and rallied against both the euro and dollar despite reignited stagflation fears. The cable remained resilient and consolidated on the upside to end the session at $1.3545/$ after reaching a high of $1.3575/$.
The South African rand led the pack on Friday, ending the week strong alongside other emerging market currencies. The local unit clawed back some major gains on the back of a continued re-entry into risky assets, which saw the dollar lagging across global markets, with month end flows and positioning from global investors also adding the rand. The rand strengthened to a low of R14.8334/$ before ending the session at R14.8682/$.
On the data front we don’t have much locally, and internationally, we have Factory orders data from the US. The local unit will most likely continue to track global events and other market-moving events today.
Expected ranges for the day:
USDZAR R14.7500/$ – R15.0000/$
EURUSD $1.1550 – $1.1635
GBPUSD $1.3500– $1.3600
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.