Following a bold move to highs last traded in over a year and a half, the dollar index pulled back on Friday and gave up part of its gains to end the week on the back foot. A combination of signs of gradual stability in the geopolitical tension front, which saw risk appetite picking up, and US inflation data which is expected to ease the Fed’s tightening prospects weighed on the dollar. The dollar index dipped to a low of 96.523 before ending the session at 96.615.
After been a causality of war, the single currency found some reprieve on Friday, coming out of the woods as the dollar’s haven-fueled rally diminished on the day. The market’s reassessment of the ongoing sanctions against Russia from the rest of the world saw risk briefly coming back into play. The euro rose to a high of $1.1273 in an attempt to pair its losses, ultimately ending the session at the day’s high.
Renewed risk appetite did little for the pound on Friday as compared to the euro. Although the pound edged slightly higher, the cable’s bulls were capped on the day, despite a broadly weaker dollar. The pound rose to a high of $1.3437 before ending the day at $1.3410
South Africa’s rand showed some resilience on Friday, pulling back from Thursday’s high’s to end the week on the front foot. The local currency powered through a slow start to the day as Ukraine -Russia tensions continued to dominate market headlines. The rand touched a high of 15.3700$ before strengthening to 15.1100$ at the start of the New York session, taking advantage of a softer dollar and being lifted further by high precious metal prices.
On the international data front, we have Chicago PMI data due from the US this afternoon. Locally, we have money supply numbers, private sector credit data, and trade balance data for the month of January are due today. We expect the local unit to continue tracking further developments around geopolitical tension.
Expected ranges for the day:
- USDZAR: R15.0000/$ – R15.5350/$
- EURUSD: $ 1.1100 – $1.1240
- GBPUSD: $ 1.3245 – $1.3450