The US dollar index continued to come off its recent highs on Tuesday, alongside falling US yields on the day. Despite having had a decent start to the day, the dollar was seen trading under pressure throughout the session, with precious metals seeing some good flows, as investors continued to trade with caution ahead of the US inflation data. With the ongoing discussion around the Fed’s board changes, also weighing on the dollar. The dollar retreated further to a low of 93.875 before ending the session weaker at 93.955.
Following a soft start to the day, the single currency was seen shooting up in its intraday day activities, although the move lacked support, as the euro shortly pulled back to end the session relatively firm. Mixed economic data from Germany, along with a weaker dollar continued to boost the euro on the day. The single currency rose to a high of $1.1685, before consolidating to end the session slightly firm at $1.1595.
Despite a broadly weaker dollar on the day, the pound sterling struggled for direction yesterday, ultimately failing to seize an opportunity to make up for lost ground, as Brexit concerns held back the cable, amongst other things. The pound rose to a high of $1.3608 and dipped to a low of $1.3524, before ending the session flat at $1.3560.
The South African rand traded sideways in yesterday’s session to end the day weaker, pressured by ongoing power cuts, which are expected to last up until the weekend, alongside higher inflationary concerns in the U.S. The local unit closed the session at R15.0092/$ after reaching a low of R14.8570/$.
With the maiden medium-term budget policy statement upon us tomorrow, local investors continue to wait on the sidelines for some clues as the minister of finance is expected to give a directive on the budget deficit and economic growth projections over the next three years.
In the way of data today, we are thin on the local front. Internationally, we have inflation data releases in Germany and the U.S. The rand is most likely to remain pressured by key global economic data releases.
Expected ranges for the day:
- USDZAR: R 14.9500/$ – R15.2000$
- EURUSD: $ 1.1530 – $1.1610
- GBPUSD: $ 1.3510 – $1.3600
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