Dollar dominance continued across global markets yesterday, with the index soaring to an almost 16 month high against its peers on the day, on the back of this week’s high inflation print. Fears over the Fed’s assertion that inflation is transitory seem to be fueling speculation of interest rate hikes arriving sooner than expected. The index rose to a high of 95.196 before ending the session at 95.178.


The shared currency subsided further on Thursday, reaching a low of $1.1445 as the ECB is perceived as a laggard with regard to policy tightening and the dollar remaining better bid on the back of inflation fears. The euro continued to sell off, ending the session weaker at $1.1449.


The pound sterling was not spared on the day, as the cable was seen recording new lows for the year. Softer UK GDP data, along with inflationary concerns in global market kept the cable under immense pressure yesterday. The pound continued to weaken, reaching a low of $1.3359 before ending the session at $1.3363.


The South African rand halted its two-day losing streak during yesterday’s trading session, despite inflation concerns clouding global markets and persistent load shedding woes. The local unit was seen gaining momentum in the early trades touching a low of 15.1747/$ as the market waited in anticipation for the mid-term budget speech from Finance Minister Enoch Godongwana. Although there was a slight retracement post the mid-term budget, the rand still managed to end the session firm. The rand traded a high of R15.4794/$, before strengthening to a low of R15.1747/$ and ultimately ending the day at R15.2979/$.

During his mid-term budget statement, Minister Godongwana commented around National Treasury not taking on any more long-term spending, or offering any more bailouts to state-owned entities in the medium term in an effort to reduce debt and aid economic recovery.

We are thin on the data front locally. However, we have industrial production data due from the eurozone as well as consumer data from the US due this afternoon.

Expected ranges for the day:

•                         USDZAR: R 15.2000/$ – R15.4000$

•                         EURUSD: $ 1.1400 – $1.1460

•                         GBPUSD: $ 1.3320 – $1.3400

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