The dollar index traded under pressure as it kicked off the month of March, falling from a high of 105.094 intraday as hotter than expected macroeconomic data out of China evidenced a robust recovery in its economy, sparking risk-on appetite. The dollar posted further losses as US ISM Manufacturing PMI report revealed a contraction in the manufacturing sector in the month of February. Failing to make a significant recovery, the dollar index ended the day at 104.483.
The euro edged higher, clawing back all its previous session’s losses bolstered by a higher-than-expected German inflation print and a more hawkish tone expressed by the ECB on interest rates. The euro tested a high of $1.0692 intraday and after a slight retreat, ended the session at $1.0671.
Pound Sterling started the month of March with a mixed session, as it traded in positive territory for the better part of the day with a broader weaker dollar and risk-on sentiment, and a more hawkish mood from the BOE. The cable fell during the US session post the US ISM Manufacturing PMI, depreciating to a low of $1.1965 but managed to make a return to end the session firmer at $1.1.2031.
The South African rand had a solid start in the early hours as emerging market currencies enjoyed softer risk conditions post China’s positive PMI data release. The move in the US dollar lower from its elevated levels saw the local unit strengthen to R18.0900/$ intraday as risk on conditions continued to permeate the market throughout the session. The local unit closed off the session in the green, significantly below opening levels at R18.1550/$.
The economic calendar remains muted on the local front, while on the international front there’s Unemployment data, CPI and Consumer price data from the Euro Zone and Initial Jobless Claims data from the US. In the absence of local key events the rand should continue to take its cue from headlines that could possibly alter risk conditions.
Expected ranges for the day:
- USDZAR: R17.90/$ – R18.30/$
- EURUSD: $1.0600 – $1.0720
- GBPUSD: $1.1940– $1.2100