The USD dollar had the best day yesterday, as it was better bid across the board, clawing back three sessions worth of losses in a single move. We saw the index closing 94bps to 94.85 firmer on the back of higher-than-expected US inflation numbers. CPI printed 6.2% y/y giving a 12bps lift to the US 10-year bond yield.
The single currency plunged to lows last seen in July 2020, as inflation jitters took global markets by storm on Thursday. Following a flat session the previous day, the single currency was seen dipping to a low of $1.1477 on the back of dollar dominance, before ending the day at $1.1480. The market’s expectations that the Fed could raise rates faster than its European peers also weighed on the shared currency.
Sterling closed 1.07% in the red against the dollar to $1.3415 in late New York. Traders hammered the currency following news that the post-Brexit agreement on Northern Ireland looks unlikely in the near future between the EU and the UK, with a stronger dollar also putting the cable under immense pressure on the day.
The South African rand lost footing and continued its losing streak in yesterday’s session, touching levels we haven’t seen this week.
The local currency remained under pressure to touch a high of 15.4000/$ before ending the session at 15.3900$ after better than expected inflation numbers out of the US lifted the dollar.
Stage 3 Load shedding further weighed on the rand as Eskom struggles to correct the rolling blackouts due to continue for the rest of the week.
All eyes are on the medium term budget statement today as investors wait for further clues and direction from the finance minister.
On the data front today we have mining and manufacturing data due locally as well as the mid-term budget statement from the minister of finance. Internationally, we have manufacturing and GDP data in the U.K amongst other data releases.
Expected ranges for the day:
- USDZAR: R 15.3800/$ – R15.6000$
- EURUSD: $ 1.1425 – $1.1500
- GBPUSD: $ 1.3980 – $1.3440
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