The U.S dollar index lost momentum on Wednesday, giving back all its previous day’s gains, with anticipation of the Fed’s monetary policy meetings, as well as monetary policy decisions from other global central banks, driving sentiment on the day. The dollar index ended the session at 93.802 before touching a low of 93.693 and reaching a high of 94.007.
The euro strengthened in the session ahead of the ECB’s meeting, although struggled to hold on to its earlier gains, as we the single currency broadly consolidating to end the session flat. Consumer confidence data in France missed market expectation by -2.0, as it printed at 99. Similarly, YoY import price from Germany also missed market expectation by -0.30%, as it printed at 17.7%. The single currency reached a high of $1.1625 and closed at $1.1604.
The pound sterling weakened, and, like the dollar and euro, this is also on the back of expectations of possible rate hikes from the BoE. The pound closed at $1.3746 after hitting a low of $1.3707.
An extremely volatile day for the rand. The local unit rapidly lost momentum and took a nosedive, trading on the backfoot once again, as the local power utility company plunged most parts of the country into darkness by implementing stage 4 load shedding. Adversely denting investor sentiment, and also sent the rand reeling to a high of R15.0838/$. With softer commodity prices also weighing on the local unit. The rand ended the session under immense pressure at R15.0775/$.
Investor focus shifts to key data releases from the US and Eurozone, locally we expect our PPI data print, anticipate these data releases, and other global headlines to drive markets.
Expected ranges for the day:
- USDZAR: R 14.9500/$ – R15.1500/$
- EURUSD: $ 1.1550 – 1.1610
- GBPUSD: $ 1.3720 – 1.3780
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.