Demand for haven currencies, particularly the dollar continued to diminish. This was on the back of the latest vaccine developments that ignited positive sentiments in the market. The U.S food and drug administrator granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech, as a result, concerns surrounding the delta variant were pushed to the side making room for further risk appetite. The dollar index dipped to a low of 92.8930 after reaching a high of 93.084.
The single currency continued its winning streak for the 2nd consecutive day this week, benefitting from a weaker dollar environment as risk appetite continues to ride the wave. The euro managed to break above the $1.17 level, closing the session at $1.1759 and reached a high of $1.1764.
The pound failed to hold on to its gains from the previous session, it was seen giving away some of its gains to make a rebound in the latter part of the day, to close the session flat at $1.3729.
The South African rand edged lower on Tuesday as well, continuing to come off its recent highs, despite unemployment numbers printing higher on the day. Renewed risk appetite across global markets, which saw a continued re-entry into riskier assets lifted the local unit, along with other emerging market assets. The local unit fell to a low of R14.9717/$ before ending the session at R15.0016/$.
According to the data released by Stats SA yesterday, South Africa’s unemployment rate rose from 32.6% in Q1 to 34.4% in Q2. This is said to be the highest unemployment rate. Locally, we nothing on the data front and Internationally we have Business cliemate data in Germany and Durable goods data in the US, amongst others. The local unit is most likely going to follow global trends and other market moving events.
Expected ranges for the day:
• USDZAR: R14.9000/$ to 15.1000/$
• EURUSD: $1.1720 to $1.1760
• GBPUSD: $1.3690 to $1.3740
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