The dollar index pulled off another stellar performance against its rivals, as expectations of a rate hike happening sooner continues to collar the market. The dollar recorded a high of 96.491 on the day and impressively closed the session at 96.875.
The single currency closed the day weaker against the dollar at $1.1198 after hitting a high of $1.1253 on the day. The reluctance of the ECB to increase interest rates in response to rising inflation in the Eurozone continues to weigh on the currency. A weak German business print out yesterday added to the drag on the common currency.
The cable closed softer on the day at $1.3329 after opening at $1.3379 stretching to a 4 day losing streak against the dollar. Brexit negotiations over Northern Ireland and monetary policy guidance from BoE continue to weigh on the Sterling. Investors will focus on cues from the BoE to understand if rates will increase at its next meeting on 16-Dec.
South Africa’s rand traded on the backfoot once again on Wednesday. The local currency started the day at R15.8092/$, and staged a brief recovery during the early session but lost its momentum as dollar demand continues to dominate the market. The rand weakened to a high of R15.9738/$ and closed the session at R15.8932/$.
With increasing Covid-19 positive cases and the threats of a 4th wave looming as well as Turkey’s decision to cut interest rates undermining the rand’s performance, the local unit remains vulnerable to persistent risk aversion.
On the data cards locally we have PPI print and data releases from the UK and Germany, anticipate global trends to drive markets.
Expected ranges for the day:
- USDZAR: R 15.8000/$ – R16.0500$
- EURUSD: $ 1.1180– $1.1230
- GBPUSD: $ 1.3315 – $1.3375
|This communication (“this communication”) has been provided by the corporate and investment banking division of Absa Bank Limited a registered bank in the Republic of South Africa, a subsidiary of Absa Group Limited, with company registration number: 1986/004794/06 and with its registered office at: Absa Towers East, 3rd Floor, 170 Main Street, Absa Towers West, 15 Troye Street, Johannesburg 2001, Republic of South Africa (“Absa”). Absa is regulated by the South African Reserve Bank. Absa has provided this communication for information purposes only and you must not regard this as a prospectus for any security or financial product or transaction. This communication is from an Absa Sales and/or Trading desk and is not a product of the Absa Research department. This communication has not been produced, reviewed or approved by the Absa Research Department, and is not subject to any prohibition on dealing ahead of the dissemination of research. The views in this communication are not a personal recommendation and do not take into account whether any product or transaction is suitable for any particular investor. This message is subject to the terms and conditions at: http://www.absa.co.za/disclaimer. This communication is confidential and no part of it may be reproduced, distributed or transmitted without the prior written permission of Absa.