The dollar emerged victorious once again on Thursday, extending its gains for a fourth consecutive session as the market continued to digest comments made by the Fed this week. The dollar was lifted further by better than expected GDP data, which showed that the US GDP had increased to 6.9% in the fourth quarter of 2021. The dollar started the day on the front foot, and extended its rally to touch 97.292, before ending the session at 97.255.
The euro suffered another day of losses during yesterday’s session and consolidated on the downside. The euro fell to its lowest level in 7 months as the dollar continued to dominate on the day. The shared currency traded a high of $1.1243 on the day and dipped to a low of $1.1130 before ending the session marginally weaker at $1.1143.
The pound fell to its lowest levels in a month under the weight of a stronger dollar. Investor’s anticipation that the BoE will increase interest rates in next week’s meeting did little to help the pound on the day as the currency dipped to touch a low of $1.3355 intraday before clawing back some of its losses to end the session at $1.3380 after reaching a high of $1.3468.
Following SARB’s decision to increase its lending rate by 25bp to 4%, in line with market’s expectations, the rand rapidly lost its momentum, erasing its earlier gains. The SARB’s governor Lesetja Kganyago, further signalled that a gradual rise in interest rates will be adequate to curb and keep rising inflation expectations steady. Risk on sentiment remained diminished throughout the session as dollar demand hampered the rand’s performance , paired with market’s volatility, ultimately drove the rand to weaken to a high of R15.5308/$ before ending the session on the backfoot at R15.4596/$.
We are empty on the data front locally, while the focus internationally will be on key data releases from the US and Eurozone. We expect the rand to take its direction from these events today.
Expected ranges for the day:
- USDZAR: R15.3000/$ – R15.6000/$
- EURUSD: $ 1.1090 – $1.1185
- GBPUSD: $ 1.3380 – $1.3430