The US dollar edged higher on Tuesday, recouping the previous day’s losses ahead of the US CPI inflation data. Change of tone regarding tapering from the ECB also provided support to the struggling dollar on the day. The dollar index rose to a high of 95.750 before closing off at 95.643, with the eyeing of CPI data for further clues.
The euro’s bulls were further derailed on the day, as the single currency continued to come off from its recent highs. President Lagarde’s comments pertaining to tapering prospects kept the common currency on the back foot yesterday. We saw the euro retreating to a low of $1.1397 before capping its losses to end the session weaker at $1.1420.
Following a flat session on Monday, the pound was seen struggling for direction yesterday. The BoE’s hawkish stance on interest rates kept the cable afloat, although the gains were quite marginal. The pound sterling reached a low of $1.3508 and a high of $1.3561 before consolidating to end the session at $1.3547.
The local currency ticked higher in Tuesday’s open as the dollar gained ground on the back of rising US Yields and speculations around the upcoming US inflation numbers, and how that can lead to accelerated rate hikes from the Fed. However, later in the day Eskom suspending further power cuts gave the local currency an opportunity to recover. The Rand depreciated to a high of R15.5825/$ before it strengthened on the day to close at R15.3385/$.
Two key risk events looming on the horizon tomorrow for the Rand are The State of the Nation Address, along with US inflation both for the same day.
Internationally, on the data front, we have Imports and Exports MM SA from Germany, Production MM and YY from Italy and from the US, Wholesale Inventories. Locally we have no data, the Rand take direction from market-moving
Expected ranges for the day:
- USDZAR: R15.2500/$ – R15.4000/$
- EURUSD: $ 1.1400 – $1.1440
- GBPUSD: $ 1.3540 – $1.3580