The dollar lost momentum in yesterday’s session and edged lower, subsequently to the Feds announcing that it is not in a rush to raise interest rates although a hike remains in their radar in the long term. This has raised eyebrows given the inflationary pressures in the economy. Despite everything, the Feds advised that it has begun implementing necessary measures to bolster economic growth to curb the pandemic impact. The dollar index closed the session lower at 93.864 after it reached a high of 94.212
The euro posted marginal gains in yesterday’s trade to break above $1.16 once more, benefitting from an ailing dollar. The single currency closed the session higher at $1.1616 after reaching a low of $1.1565.
The pound jumped on the bandwagon of strengthening bias and made a rebound, taking advantage of a weaker dollar and geared up ahead of the bank of England’s interest rates announcement. The market seems to be expecting a rate hike, if this materializes, the bank of England will become the first central bank to hike rates since the pandemic. The sterling closed the session at $1.3685 after reaching a low of $1.3606
The South African rand edged lower on Wednesday even though the local municipal elections and continuous power outages has taken a toll on the rand. Nevertheless, the rand found some reprieve yesterday on the back of dollar weakness after the FOMC made an announcement that asset tapering will start this month. The rand closed reached a low of R15.2225/$, before closing at R15.2589/$.
On the local data cards, we have the S.A. budget balance data release later and there will be a key focus on the municipal results as most of the votes was counted yesterday. On the international data front, we can expect an array of data from the eurozone, U.S. and the U.K., specifically Bank of England monetary policy decisions.
Expected ranges for the day:
• USDZAR: R 15.1500/$ – R15.3500/$
• EURUSD: $ 1.1560 – $1.1640
• GBPUSD: $ 1.3625 – $1.3725
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