The dollar tracked lower in Friday’s session and gave back its gains as fears of the discovery of a new coronavirus variant rattled markets and saw investors unwind their long dollar position in favour of the Japanese yen and Swiss franc. The dollar index traded a low of 95.753 and closed on the day at 96.089.
The euro had a good run and rose sharply during intraday trading, touching a high of $1.1330 as investors took profits on their short euro positions, despite the market’s risk-off sentiment . With the discovery on the new Covid-19 variant, market participants anticipate that the central bank will review its dovish monetary stance which it has maintained thus far.The euro consolidated firmly on the upside and closed the session at $1.1317.
The pound initially retreated at the start of the European session but managed to find its footing and posted modest gains as the dollar edged lower, spurred by the markets flight to the havens. The cable has been dominated by a divergence between BoE and Fed monetary policies off late, and now faces additional pressure from the latest Covid-19 developments. The pound touched a high of $1.3367 and closed at $1.13340.
The South African Rand had a volatile day in Friday’s session with pressure emanating from the discovery of the Omicron variant, which triggered a major sell off of riskier assets. The local unit slumped to its lowest level since October 2020, depreciating to a high of R16.3630/$.
The rand has found itself, once again, in the relentless grip of the virus’ devastating effects , dashing hopes of improved economic activity, especially in the tourism sector as we head to the holiday season. The rand ended the session under pressure at R16.3027/$.
Th economic calendar is abuzz with data releases both locally and internationally. Anticipate Covid-19 developments to remain the main headliner in addition to these data releases.
Expected ranges for the day:
• USDZAR: R 16.0900/$ – R16.2800$
• EURUSD: $ 1.1250– $1.1310
• GBPUSD: $ 1.3320 – $1.3343