The dollar edged higher, breaking through the 99 handle, marking its territory as a safe-haven as dollar demand dominated throughout the session. A rise in treasury yields post the accelerated sell off in JPY bond yields, further lockdown restrictions in China and elevated expectations of extra tightening from the Fed lent support to the dollar’s rally. The dollar index rose to a high 99.369 and closed the day at 99.091.
The single currency started the week on the backfoot as positive sentiment towards the euro rapidly dissipated throughout the session. After rising sharply in its earlier activities, market participants pulled the plug on riskier assets, triggered by another bout of risk off sentiment which saw the single currency land in negative territory. The euro touched a low of $1.0945 and closed the session weaker at $1.0985.
A subdued start for the pound this week as it tracked lower against both the dollar and the euro. The cable registered additional losses as it remains bound between a divergence of BoE and Fed monetary policies, with inflationary pressures on both sides and a gloomy economic outlook. Pound Sterling dipped to a low of $1.3065 and closed the day at $1.3095.
Following an indecisive move in its previous session along with booking marginal losses, the local unit caught a decisive move higher to kick start the week yesterday, trading away from its recent 5 month low. Renewed Covid-19 jitters, which saw the return of lockdown regulations in China, along with the prolonged Russian invasion into Ukraine triggered safe-haven buying and put the demand for risk assets under pressure. The rand rose to a high of R14.7400/$ before closing off the day at R14.6600/$.
Locally we are empty on the data front today. Internationally we have some numbers coming out of Germany, the UK, and the US. The rand will most likely continue to track global trends and other market-moving events.
Expected ranges for the day:
- USDZAR: R14.4700/$ – R14.8500/$
- EURUSD: $ 1.0920 – $1.1045
- GBPUSD: $ 1.3051 – $1.3168