A disappointing start to the week for the dollar as it was not spared in yesterday’s session. It was seen reversing some of its accumulated gains from last week to consolidate to the downside, with risk aversion dissipating into thin air. The change of tone on the hawkish stance by the Federal Reserve over the weekend dampened sentiments, translating into the U.S yield curve flattening to levels we haven’t seen in three months, this weighed down on the currency as it raised concerns about the future growth of the economy. The dollar index closed the session at 96.54 after reaching a high of 97.30 on the day.
The euro had an upbeat end to the month as it seized the window of opportunity when it presented itself. Finding support from renewed risk-on sentiment on the back of an ailing dollar and further bolstered by the market repricing a possibility of an interest rate hike by the ECB towards the end of the year, together with positive data that came out of the Eurozone yesterday. The single currency reached a high of $1.1244 after reaching a low of $1.1147.
The pound jumped on the bandwagon of strengthening bias having a decent end to the month as the market gears up for an interest rate hike in the Bank of England’s interest rates announcement on Thursday. The pound closed the session at $1.3445 after reaching a high of $1.3460.
A firm start to the week for the local unit, with the rand regaining its composure and edging lower in yesterday’s session. The rand gathered its momentum and powered through the R15.40/$ handle to reach a low of R15.3219/$ as the dollar run subsided and risk sentiment improved in global markets. The rand was further lifted by surging commodity prices and displayed its resilience post the print of a contraction of the domestic trade balance to 30.14 billion rands. The rand ended the session at R15.3808/$ on the day.
We are slightly heavy on the data front today, with key international data releases from the US, UK, and Eurozone. The local unit will most likely continue to track international data and other market-moving events.
Expected ranges for the day:
- USDZAR: R15.2500/$ – R15.4500/$
- EURUSD: $ 1.1190 – $1.1260
- GBPUSD: $ 1.3400 – $1.3480