The dollar came of its recent highs and gave back some of its previous gains as the overstretched dollar run subsided. A decline in weekly jobless claims to 268K did little to change the dollar’s trajectory. The dollar index traded a low of 95.518 and closed out at 95.544.
After trading on the back foot for three consecutive sessions, the euro found some reprieve in yesterday’s session. The single currency was able to book some sizable profits, taking advantage of the softer dollar as investors made room for risk. The common currency rose to a high of $1.1374 before ending the session at $1.1369.
The pound initially rallied at the start of the session but lost it momentum and traded lower against both the dollar and euro. Lingering Brexit woes, BOE rate hike jitters and key UK data releases put a dampener on sentiment. The pound touched a low of $1.3462 and ended the day at $1.3488.
In its final MPC for the year the SARB bowed to prices pressures and hiked rates by 25bps.The market had been pricing in a hike for some time this provided no support to the local unit as it fell to its weakest levels against the dollar for the year.
The local unit hit 15.7657 post MPC before hovering around 15.7095 late afternoon. Adding to Rand woes is contagion from Turkey as the central bank cut rates and the Lira broke the 11 handle despite double digit inflation.
On the data front, UK retail sales is due out today this should give more clarity on thee BoE’s impending rate hikes. Over the pond Eurozone consumer confidence flash is due this should hopefully give more clarity on the ECB’s reluctance to hike rates. We expect the rand to remain under pressure as energy woes and a general risk sentiment weigh on the currency.
. Expected ranges for the day:
- USDZAR: R 15.5300/$ – R15.6800$
- EURUSD: $ 1.1300 – $1.1370
- GBPUSD: $ 1.3440 – $1.3500
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