The dollar index ticked higher during Friday’s trading session, aided by the recovery in US yields and bets of a Fed rate hike of 50bps by the end of March 2022. The dollar was lifted further, breaking the 96.00 level as the US warned that Russia could launch an invasion on Ukraine given the number of troops assembled on its borders. The dollar ended the session firmer at 96.082 after touching a high of 96.111.
The euro found itself on the back foot, as dollar demand and demand for other safe haven currencies dominated Friday’s session. The euro was further weighed by the ECB’s President, Christine Lagarde’s comments on how a rate hike will most likely undermine economic growth and recovery prospects. The single currency tested a high of $1.1427, before taking a nosedive to end the session at $1.1348.
Pound sterling also fell victim to a stronger dollar on Friday, despite an array of UK data releases on the day. Although inflationary pressure continue to be evident in the UK, the cable continues to show some resilience, with the BoE’s hawkish prospects also keeping it intact. The pound reached a low of $1.3535 before ending the day on the back foot at $1.3547, although remaining within range.
Following a good run throughout the week, the local unit gave up marginal gains on Friday to end the week on the back foot. We saw the rand retreating during late trades, after dipping to a low of R15.0650/$ on the day. Interest rate hike bets, along with a possible Russian invasion supported the ailing dollar on Friday, also diminishing risk appetite. The rand surrendered its earlier gains, retreating to a high of R15.2725/$, before ending the session at R15.2200/$.
Today we have nothing on the local data cards. Internationally we have an array of data across the EU, UK, and the US. The local unit will most likely continue to track developments around geopolitical tensions and other market-moving events.
Expected ranges for the day:
- USDZAR: R15.1000/$ – R15.3000/$
- EURUSD: $ 1.1325 – $1.1375
- GBPUSD: $ 1.3525– $1.3600