The U.S. dollar traded slightly firmer in yesterday’s trade ahead of the Feds minutes meeting due today, which saw investors waiting on the side-lines for further direction, although the market seemed to have priced in a possible outcome. The Feds is expected to take a hawkish stance given the current inflationary pressures. The dollar index ended the session at 94.090 after reaching a low of 93.818.
The single currency ran out of steam and consolidated on the downside, failing to find support above $1.16 to give away its mild gains from the previous session, pressured by a firmer dollar environment. The euro closed the session weaker at $1.1579 and reached a low of $1.1575 on the day.
The pound continued its weakening bias with no sense of conviction ahead of the bank of England’s rate announcement this week, in which the market is expecting an outcome that will curb inflationary concerns in the economy. The pound ended the day weaker at $1.3614 and reached a low of $1.3606.
The South African rand struggled quite a bit for direction in yesterday’s session, as it consolidated to end the day. Rand’s weakness can be linked to a rise in fuel prices, ongoing local power outages, the municipal election results as they feed in, as well as a stronger dollar on the day. Currently, the African National Congress leads the way, but with an alarming lowest performance since 1994. The rand traded almost flat towards the end of the session and closed at R15.4318/$ before reaching a high of R15.4904/$.
The rise of fuel prices stems from an array of reasons, such as the rand weakening and global demand for crude oil. From today, an increase in fuel prices in S.A. comes into play with petrol rising by R1.21 per liter and diesel by R1.48.
On the data front, we can expect updates from the domestic municipal elections throughout the day. Internationally, we expect unemployment rates from Italy, along with the EU and Budget Balance in France, Nationwide house prices in the U.K., and Mortgage application data from the U.S., amongst others. The rand will probably be driven by local and international news today.
Expected ranges for the day:
- USDZAR: R 15.3500/$ – R15.5500/$
- EURUSD: $ 1.1550 – 1.1600
- GBPUSD: $ 1.3550 – 1.3650
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