The dollar lost its footing slightly during intraday trading and retreated modestly from its previous gains. A decline in the US consumer confidence index printed 66.8, its lowest level in 10 years from a prior high of 71.7 briefly halted the dollar run but the dollar managed to cement is safe haven status to end the week relatively firm. The dollar index reached a high of 95.265 after trading to a low of 94.997 and finally settled at 95.128.
The euro gained positive traction although with reduced momentum earlier in the session but came under pressure as sentiment towards the common currency dissipated on the back of the stronger dollar. The single currency displayed some resilience and clawed back its earlier losses towards the latter parts of intraday trading as the dollar run subsided. The euro consolidated marginally on the upside to end the session at $1.1450 after trading a high of $1.1461 and a low of $1.1431 respectively.
The pound found some reprieve and staged a recovery as investor sentiment favoured the cable. The cable found support from a rebound in risk, shrugging off persistent Brexit woes and diminished BOE rate expectations. The pound managed to end the week relatively steady after trading to a high of $1.3426 and finally ended the session at $1.3413.
National treasury pledged on Thursday to reduce the budget deficit as well as debt in the medium term budget. Treasury will not commit to long-term spending despite the reprieve from higher commodities prices. The local unit received Finance minister Enoch Godongwana’s maiden budget speech very well, closing slightly stronger against the dollar on Friday to 15.34 as the market seemed to further digest the MTBS positively.
Power cuts are still weighing on the currency as load shedding makes its presence felt. The local power utility’s CEO has indicated that restructure milestones are on track to be reached by the end of the year. The energy crisis plaguing SA continues to pose downside risk to the local unit.
Locally, we are empty on the data front, although we have reserve assets total and manufacturing data from the EU and the US. The rand will most likely continue to take its cue from global events.
Expected ranges for the day:
- USDZAR: R 15.2500/$ – R15.4000$
- EURUSD: $ 1.1420 – $1.1480
- GBPUSD: $ 1.3390 – $1.3480
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