Another day under the weather for the dollar, as it continued to show vulnerability for the third consecutive day this week in yesterday’s session. The dollar post-Fed rally disappeared into thin air further instigating demand for riskier assets. The dollar was also weighed down by the ADP employment release coming in at a loss of 301k jobs in the private sector as opposed to a forecast 207k gain. The dollar closed the session weaker at 95.936 and reached a low of 95.806.
The euro continued to impressively ride the wave of strengthening bias and broke above $1.13 for the first time this week, with market participants waiting on the sidelines for some clues as the ECB rates announcement is upon us. The market expects rates to be kept unchanged but, given the recent inflationary pressures, they are leaving the door open for a change. The euro closed the day at $1.1306 and reached a high of $1.1327.
The pound traded stronger in yesterday’s session in anticipation of the Bank of England’s MPC meeting due today, with the market expecting a rate hike of 25bp. The sterling closed the day stronger than its previous session at $1.3570 after reaching a high of $1.3588.
The local unit ended the session weaker, although it started off the session mostly range-bound, after another failed attempt to trade below the R15.20/$ level. The rand registered losses in the latter parts of the session, weighed by announcement of a resumption in electricity outages (load shedding) as the power utility battles to build its generation capacity as a result of delayed scheduled maintenance and unexpected breakdowns. The rand closed the session at R15.3340/$ after weakening to a high of R15.3990/$.
The economic calendar is buzzing today, with the release the BOE’ rate decision and US Initial Jobless Claims amongst others. The local unit will most likely remain vulnerable and take its direction from these events.
Expected ranges for the day:
- USDZAR: R15.3200/$ – R15.5000/$
- EURUSD: $ 1.1262 – $1.1345
- GBPUSD: $ 1.3485 – $1.3570