The dollar index traded softer in its earlier activities on Thursday after disheartening economic data, with US weekly unemployment claims increasing by 55 000 to 286 000 due to Omicron disruptions. The dollar traded within a range but manged to change direction and was seen reversing some of its losses later in the day, finding support from treasury yields. The dollar index ended the session firmer at 95.735 after testing a low of 95.419.
The euro failed to hold onto its gains and found itself once again on the backfoot as the dollar was lifted by US treasury yields. The euro was under pressure as the ECB’s meeting minutes revealed conflicting outlooks when it comes to inflation. Christine Lagarde, ECB president shares that she sees no reason for the ECB to act in the same way as the Fed. The shared currency went to test a high of $1.1368 and closed out the session at $1.1306.
The sterling pound proved to be resilient in Thursday’s session as the dollar was softer on the back of disappointing jobless claims. The uproar around the change in leadership, with UK chancellor Rishi Sunak, likely to replace Prime Minister Boris Johnson had not much of an impact on the cable. The cable tested a high of $1.3662 on the day and closed out the session at $1.3593.
The rand extended its strengthening momentum into yesterday’s session, posting additional gains and taking advantage of a softer US dollar as the market continues to digest the latest inflation data print. With the rand’s improving performance, the local units appeal, as a high yielding asset continues to be sought by investors and the potential of reclaiming its status as top performing emerging market currency remains in sight. The local unit touched a low of R15.2695/$ and closed out at R15.3263/$.
Not much in the way of local data today. internationally, we have U.K retail sales figures and Eurozone Confidence Flash. The rand will most likely take its direction from global events.
Expected ranges for the day:
- USDZAR: R15.0500/$ – R15.3500/$
- EURUSD: $ 1.1270 – $1.1350
- GBPUSD: $ 1.3550 – $1.3620