The U.S. dollar index continued to strengthen against its majors in yesterday’s session, as investors looked for safety on the back of concerns surrounding the Evergrande risk rising again and global outages debacle. Furthermore, the demand for safe-haven was supported by the anticipation on when the Fed will start asset tapering. The U.S. dollar index reached a high of 93.806 before ending the session at 93.766.
The euro continue its losing streak and remained under pressure on the back of dollar gains, where the dollar has been more attractive to risk-averse investors. The euro hit a low of $1.1666 and closed the session at $1.681.
The pound followed pursuit and edged lower on the day as the dollar came in stronger, despite the BoE’s remarks about interest rate hikes that could potentially be on the cards. Also, the growing concerns of gas and petrol shortages in the U.K did not help the currency either. The pound closed the session at $1.3534 after touching a low of $1.3518
The rand traded weaker in yesterday’s session and continued to take strain as its demand remained subdued on the back of a stronger dollar which was bolstered by a surge in US Treasury yields. Ultimately the local unit ended the day relatively fragile at R15.0925/$ after reaching highs and lows of R15.1673/$ and R14.9037/$ respectively.
The rand was not alone in its woes though as a basket of its emerging market peers also continue to trade under immense pressure as risk aversion dominates the market and demand for high risk assets is mellow. In addition to global factors, the rand’s outlook is poised to remain under further threat ahead of local government elections on November 1st.
No data expected on the cards on the local front today but an array of data due in the UK and US. The rand is most likely to take direction from these releases, as well as any changes to risk appetite at this time as there is unfortunately nothing to drive it locally.
Expected ranges for the day:
USDZAR: R15/$ to R15.20/$
EURUSD: $1.1640 to $1.1720
GBPUSD: $1.3480 to $1.3600