Activity was muted as the U.S took some time off to tuck into some turkey for thanksgiving yesterday. The dollar index paused its rally and closed slightly lower on the day as traders continued to position themselves in anticipation of the Fed hiking rates while other G3 nations continue with more dovish policy. The dollar index closed lower at 96.774 after hitting a high of 96.818.
The common currency paused its downward trend against the dollar in low North American liquidity due in part to cross buying of euro versus sterling to close at $1.1208 after hitting a high of 1.1228 on the day. Rising COVID-19 infections, which have made the continent the epicenter of the pandemic with Germany mulling over fresh lockdowns, continue to weigh on the euro.
The Sterling extended its losing streak against the dollar recording a low of $1.3308 on the day before closing at $1.3318. Wider market fears over the latest COVID-19 variant and Brexit woes continue to hamstring the cable. Dovish comments from BoE officials have dashed hopes for a rate hike, paving the way for more weakness.
The rand found some reprieve and slightly retraced its losses in its early activities as the heavy dollar run subsided with our U.S counterparts away for Thanksgiving. However, it reversed some of its marginal gains to close the day slightly weaker dented by a rise in the PPI data of 8.1% from 7.8% YoY in October. The local unit managed to strengthen to a low of R15.8006/$ and closed the session higher at R15.9580/$.
As Covid-19 cases continue to rise and with the possibility of further lockdown restrictions now on the horizon and their devastating impact on economic growth prospects, the rand is set to have a challenging time returning to its former glory.
Expected ranges for the day:
- USDZAR: R 16.1000/$ – R16.3000$
- EURUSD: $ 1.1200– $1.1255
- GBPUSD: $ 1.3270 – $1.3330
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