The US dollar continued on a sideway trend on Wednesday, giving up the previous session’s gains ahead of US CPI inflation data. US inflation printed 0.5% MoM previously, with the market still pricing in 0.5% for today. We saw the dollar index retreating against its peers, reaching a low of 95.383 before closing the session at 95.494.
The euro struggled quite a bit for direction yesterday, lacking the conviction to make a move higher and hold above $1.144. With the dollar trading softer ahead of key inflation data and support from the ECB’s policy prospects, we saw the single reaching a high of $1.1447 before consolidating and capping its gains to end the session slightly flat at $1.424.
The pound continued to consolidate even yesterday, although with downside pressure this time around. Despite dollar vulnerability on the day, the cable failed to take advantage of a weaker dollar, with a lack of clear policy prospects weighing on the currency as well. The pound initially rose to a high of $1.3590 before giving up all its gains to end the day on the back foot at $1.3536
The rand extended its previous day’s gains, as the dollar traded under immense pressure and investors remain guarded ahead of US CPI Inflation data, with softer US government bond yields also weighing on the dollar. The local currency strengthened to a low of R15.1700/$ and ended the session firm at R15.2200/$ on the day.
President Cyril Ramaphosa will deliver his State of the Nation address tonight, which is expected to be fact stating and usual reforms and is not expected to move the Rand by much.
Locally on the data front, we have Mining and Manufacturing numbers. Internationally, we have US CPI Inflation and US Initial Jobless Claims. The local currency will continue to track other market-moving events.
Expected ranges for the day:
- USDZAR: R15.1000/$ – R15.3500/$
- EURUSD: $ 1.1390 – $1.1500
- GBPUSD: $ 1.3485 – $1.3585