The dollar had quite a volatile session yesterday, swinging to a high of 96.002 and a low of 95.173 before consolidating its moves to end the day flat. The overly anticipated US CPI inflation came out worse than expected, printing 0.6% MoM and 7.3% YoY compared to the forecast of 0.5% and 7.3%, ultimately pushing the dollar sideways. Now more than ever, the Fed will most likely be positioned to counteract inflation aggressively. The dollar ended the session flat at 95.553, with downside pressure.
The euro tracked the dollar’s moves for the better part of the day, on the back of US CPI data that pointed to rising inflationary pressure and concerns. The single currency managed to pick up some marginal gains, after soaring to a new yearly high of $1.1494 and a low of $1.1375, ultimately capping its gains and losses to the close of the day at $1.1427.
The pound sterling tried to break out of the week’s range on Thursday, bolstered by worse than expected US inflation numbers, which pointed out that the world’s largest economy is running hot. Although the cable struggled to maintain its earlier gains, as it was seen retreating and capping its upside on the day. The pound rose to a high of $1.3643 before ending the session at $1.3561.
The South African Rand continued in its rally during Thursday’s trading session, despite mixed local economic data print, with worse than expected US inflation lifting the rand. Mining Production fell by 1.1% whilst market participants expected an increase, and Manufacturing output fell by 0.1% YOY, again less than what was expected. The local currency ended the session at R15.1800/$ after it strengthened to R14.9800/$. on the day.
Last night South Africa held its much anticipated State of the Nation Address by President Cyril Ramaphosa. The president focused on the same issues identified in last year’s State of the Nation.
The president is set in overcoming the COVID19 Pandemic, disclosing the National Sate of Disaster could be coming to an end. He touched on Infrastructure, local production, employment by job creation and to ending the expansion on the power generation.
Locally we have nothing on the cards in terms of data. Internationally the UK will deliver GDP, Consumer Prices from Germany and from the US, Consumer Survey. The local currency will most likely be vulnerable to global events.
Expected ranges for the day:
- USDZAR: R15.1500/$ – R15.3700/$
- EURUSD: $ 1.1368 – $1.1404
- GBPUSD: $ 1.3510– $1.356