The dollar index started the week on the front foot, shrugging off the previous sessions losses to touch its highest level in 2 weeks. The dollar soared to touch a high of 96.127 intraday, aided by increasing political tensions between Ukraine and Russia as well as market participants expectation of the tightening of the FED’s monetary policy. The dollar index touched a low of 95.6270 before ending the session stronger at 95.918.
The euro fell victim to a stronger dollar during Mondays trading session. The common currency traded under pressure intraday, sinking to its lowest level in 2 weeks. Weighed down further by negative market sentiment and a downtrend in business activity in the eurozone according to the IHS Markit data release. The euro touched a low of $1.1289 but managed to retrace some of its losses towards the latter parts of the session but finally consolidated on the downside and ended the session at $1.1323.
The pound extended its losing streak yesterday and traded mostly on the backfoot throughout the session as the market continued to digest last week’s disappointing retail sales data release. Persistent market risk aversion, disappointing Markit PMI numbers and a stronger dollar saw the pound slump to a low of $1.3437 before ending the session at $1.3485.
The South African rand ended its interest rate induced rally yesterday, kick-starting the week on the back foot, as growing concerns over the political landscape in Ukraine tilted risk appetite and also dominated global markets. The SARB is due for a policy meeting on the 27th, with the market penciling a 25bps hike, to counteract the effects of rising domestic inflation. We saw the local unit weakening to a high of R15.3950/$, before capping its losses to end the session at R15.2600/$
Locally, we have nothing on the data cards, and internationally we have data from Germany and the US. The local unit will most likely continue to track developments in the political conflict in Ukraine, along with other market-moving events.