The dollar index started the session trailing behind as Russian-Ukrainian geopolitical headwinds halted its rally, with muted dollar flows due to the holiday also weighing on the currency. Risk sentiment briefly made a comeback but abruptly ended as developments around the prospects of the meeting between the US and the Russian president’s remained on shaky ground. The dollar took the reins and rode the risk-off sentiment wave but failed to outdo its other safe-haven counterparts. The dollar index ended the session at 96.078 after trading a high of 96.151.
The euro had a great start to the day and was able to book sizeable gains, capitalizing on the softer dollar but its upward trajectory was short-lived as intensifying tensions in the eastern European region and diminished risk sentiment once again stole the euro’s glory. Mixed economic data also stripped the euro of any further hopes of a convincing upswing. After opening the session at $1.1314 and trading a high of $1.1390, the single currency ended the session relatively where it started at $1.1310, thus giving up all its earlier gains.
Pound Sterling remained fairly stable, and also edged closer to the $1.3650 handle once again, on the back of a marginally softer dollar. The cable was supported by positive Markit data, which indicated a rise in business activity, giving a nod to the notion of anticipated further scrapping of covid restrictions by the prime minister. The pound reached a high of $1.3638 and closed out at $1.3598.
The South African rand traded firmer for the better parts of the day in yesterday’s session, although it couldn’t hold on to its gains as it later retraced to end the session on the back foot. The rand had found support from a short-lived renewed risk appetite sparked by the latest positive developments surrounding geopolitical tensions between Russia and Ukraine, whereby the U.S and Russia plan to hold talks regarding the Ukraine crisis. The rand appreciated a low of R15.0450$, before retracing to a high of R15.2000/$ and ultimately closing the day slightly weaker at R15.1850$ compared to its previous session.
In other news, the investors are now waiting on the sidelines in anticipation of the upcoming budget speech due to be presented tomorrow. Expected to outline prospects of economic growth and debt trajectory, after the minister’s commitment in last year’s mid-term budget speech to keep debt within the financial restraints of the budget.
On the data cards, we have the local unemployment data. And nothing much to write home about on the international other than the manufacturing and consumer confidence data in the U.S. We expect the rand to find direction from upcoming economic events.
Expected ranges for the day:
- USDZAR: R15.0500/$ – R15.3000/$
- EURUSD: $ 1.1230 – $1.1380
- GBPUSD: $ 1.3560 – $1.3640