The US dollar ended another day firmer yesterday, although it struggled quite a bit for direction on the day, as price actions were predominantly sideways. A surge in Treasury yields, along with expectations that the Federal Reserve is most likely going to maintain its interest rate hike strategy continued to fuel dollar bets. Concerns over rising Omicron cases also aided safe haven flows. The dollar index rose to a high of 96.462 before a mild pull back to end the session at 96.262.
The euro continued to sell-off for yet another day yesterday, as the dollar remained better bid across the board. Mixed data, along with increasing safe haven demand and rising US yields saw the single currency tracking on the back foot on Tuesday. The common currency dipped to a low of $1.1288 before ending the session at $1.1288.
The pound sterling refused to give in against the dollar yesterday, staging an impressive recovery on the day, and also clawing back the previous day’s losses. The cable has been tracking a bullish trend since late December, with expectations that the BoE will most likely increase interest rates also continuing to support fundamentals for the currency. The pound rose to a high of $1.3556 before ending the session at $1.3527.
Our beloved currency reversed most of its mild gains from the previous session in yesterday’s trade, as global investors are inclined to believe that the Omicron variant will no longer put immense pressure on the global economy or hinder the Federal Reserve from hiking rates in the near future. As a result, this has spurred on broad-based dollar strength, putting pressure on the local currency. The local unit depreciated to a high of R16.0825/$ to end the session at R16.0175/$.
Looking ahead, we are expecting an uneventful day in the way of data with only the STD Whole Econ PMI on the local front. Internationally, we have the manufacturing data in the U.S and Germany.
Expected ranges for the day:
- USDZAR: R 15.9000/$ – R16.2000/$
- EURUSD: $ 1.1245 – $1.1310
- GBPUSD: $ 1.3500 – $1.3565