The US dollar remained better bid on Wednesday, reaching the day’s high during the European trading session and continuing to claw back some more lost ground. Although the dollar was broadly stronger across its peers yesterday, it did see a slight pullback later in the session, alongside falling US yields, on the back remarks from the Fed’s official regarding the work that still needs to be done to aid the labor market. The dollar rose to a high of 92.862 before giving up some of its gains to end the session at 92.653.
The euro continued to sell off on the day, retreating for a 3rd consecutive session. The single currency remains under pressure on the back of the upcoming ECB policy meeting, where the market is still expecting the benchmark rates to remain unchanged. The euro fell to a low of $1.1802 before ending the session at $1.1818.
The pound sterling also continued to trade under immense pressure yesterday, on the back of a stronger dollar, although the cable losses were capped by the dollar’s slight retracement later in the session. The pound weakened to a low of $1.3727 before recouping most of its losses to end the session at $1.3771.
Our beloved currency traded weaker in its early activities, weighed by risk aversion, along with a downbeat local business confidence index, which was dampened by the civil unrest that the country endured. It was later seen retrieving some of its gains to close the day firmer at R14.1806$ after depreciating to a high of R14.3617$.
The central bank governor presented a case for revising the inflation target to 3% or 4% “with a margin error either of 1 percentage point either side” compared to the current 3% to 6% target.
In the way of local data today, we have the current account and manufacturing production data. Internationally, we are expecting the ECB policy rate decision and jobless claims amongst others. The rand is most likely to follow directives from global economic events.
Expected ranges for the day:
- USDZAR: R14.1000/$ to R14.3000/$
- EURUSD: $1.1785 to $1.1900
- GBPUSD: $1.3700 to $1.3800
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