The US dollar continued to subside on the day, retreating for a 5th consecutive session yesterday, as investors sort for higher returns in risky assets. Expectations of sooner than expected policy tapering cycle and inflation concerns continued to underpin activities, with the dollar’s rivals broadly benefiting from that. The dollar index dipped to a low of 93.504 before capping its losses to end the session at 93.734.
The euro’s bulls continued to ignite yesterday, rising for a 5th consecutive session and reaching a two-week high on the day. Despite elevated US yields, the dollar remained subdued, thus allowing the single currency another session to book more gains. The euro rose to a high of $1.6685, before capping its profits to end the day at $1.1633.
After being derailed the previous day, the pound sterling came to the party on Tuesday, rallying to a three-week high in the session, and also been amongst the biggest winners against the dollar. The cable soared to a high of $1.3834 before slightly pulling back to end the session at $1.3790.
The South African rand strengthened on Tuesday, recouping all of its previous session’s losses on the day. Consequently, the rand edged lower throughout the day, as the U.S. dollar continued to weaken on the back of Monday’s poor U.S. manufacturing data, amongst other factors, which bolstered risk sentiment. The rand appreciated a low of R14.4970/$ and ended the session at R14.5224/$.
On Tuesday, the Automobile Association stated that local fuel prices will most likely increase by the end of this year, with petrol increasing by 99c per liter and diesel by as much as R1.42 per liter. Moreover, this may drive up the cost of transport and food which may have an effect on the rand
Locally, we have CPI and core inflation data released on the cards today. Internationally, we are heavy on data, with a range of data from the U.K., the Eurozone, and the U.S.
Expected ranges for the day:
- USDZAR: R 14.4000/$ – R14.6000/$
- EURUSD: $ 1.1620 – 1.1670
- GBPUSD: $ 1.3780 – 1.3850
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