Momentum was on the downside for the dollar in its earlier activities, falling to a low of 98.295 intraday. Although the dollar managed to retrace some of its losses as the Fed announced an interest rate hike of 25bps, in line with the market’s expectation, and also projecting its policy rate would reach a range of 1.75% to 2% by the end of 2022. A rally in equities posts the announcement saw dollar bulls run out of steam, driving the dollar index into negative territory, to end the session weaker at 98.618.
The euro emerged victorious once again in yesterday’s session, snatching the limelight from a softer dollar, breaking above $1.10. The single currency continued to benefit from an improvement in risk sentiment on the back of prospects of peace talks to see an end of the Russian invasion of Ukraine. The euro touched a high of $1.1046 closing the session at $1.1032.
Pound Sterling pushed higher again, posting further gains yesterday as the US dollar eased after the Fed’s policy action announcement. The pound reached a high of $1.3162 before ending the session firm at $1.3145.
The South African rand was tracking firmer ahead of the Fed’s meeting yesterday, with prospects of peace talks between Russia and Ukraine adding to the rand’s strength, as risk appetite was seen returning across global markets. Late trades saw the local unit rallying further to break and hold below the R15.0000$ handle, bolstered by the Fed’s decision to deliver a 25bps rate hike, in line with market expectations. The rand strengthened to a low of R14.9100/$ before ending the session at R14.9200/$.
Locally we are empty on the data front. Internationally, we have key data across the UK and the US, with BoE’s rate decision later today been a main event. The local unit will most likely continue to track development around peace talks, along with Covid-19 development in other parts of the world.
Expected ranges for the day:
- USDZAR: R14.8000/$ – R15.0500/$
- EURUSD: $ 1.0950 – $1.1050
- GBPUSD: $ 1.3070 – $1.3170