The US dollar was predominantly on the back foot in its early activities on Wednesday, although it still ended the session on the back foot, the dollar managed to cap its losses post the Fed’s minutes. The Fed hinted to a possibility of a sooner than expected policy tapering, given the inflationary pressure and labor market conditions. After reaching a low of 95.886, the dollar index bounced back, capping its losses for the day to end the session at 96.171.
The euro caught a breather in yesterday session, taking advantage of a softer dollar, especially ahead of the Fed’s meeting. The single currency rose to a high of $1.1343, although it struggled to hold on to all of its gains, as a hawkish tone from the Fed’s meeting saw the dollar stage a mild recovery, thus capping the euro’s gains on the day. The euro still ended day firm at $1.1313.
The pound sterling remained elevated on the day, reinforcing its bullish trend for the better part of the session, with the dollar selling-off in its early activities. Just like the single currency, the cable also trimmed its gains post the Fed’s minutes. The pound reached a high of $1.3599 before seeing a mild pull back to end the session firm at $1.3556.
The South African Rand started off on a weakening bias in yesterday’s session but was seen later recuperating from its losses and consistently trading below the R16.00/$ handle to touch a low we haven’t seen this week. This was on the back of an ailing dollar that sparked renewed risk appetite from investors in anticipation of the release of the Feds minutes meeting. The local unit appreciated to a low of R15.7150/$ after reaching a high of R16.0525/$.
In the way of data today, we are thin on the local front. Internationally, we have inflation data in Germany and Initial Jobless Claims in the U.S amongst others. The rand is most likely to get direction from global events.
Expected ranges for the day:
- USDZAR: R 15.8500/$ – R16.1500/$
- EURUSD: $ 1.1265 – $1.1345
- GBPUSD: $ 1.3460 – $1.3580