The dollar index overturned its losses from its previous session as it rallied on the back of broader weakness of its rival currencies and an uptick in Treasury Yields. Lifting the dollar higher was the US weekly Jobless Claims data which declined to 190K vs a prior 192K, signaling that the labour market is gaining traction and increasing bets of further rate hikes from the Fed. The dollar tested a high of 105.180 on the day, however as risk-aversion became subdued, it ended the session firm at 105.027.
The euro had a session of giving back its gains, depreciating below the $1.0600 mark on Thursday as the dollar recorded gains after upbeat unemployment data. The euro managed to find moments of relief, underpinned by inflation data in the eurozone, as inflation softened to 8.5% vs 8.6% in January. The eurozone also recorded a rise in core inflation from 5.3% YoY in January to 5.6% in February, sparking market participants expectations of a 50bps rate hike from the European Central Bank. The shared currency dipped to a low of $1.0576 on the day to close out the session $1.0600.
Pound Sterling was not spared as it was met with the same fate as the euro, tracking lower on the day as vigorous US jobs data and elevated US Treasury Yields lifted the dollar index. Despite finding direction and conviction, the cable’s strengthening ways were undermined by speculation of a slowdown or halt of interest rate hikes from the BoE – this remaining a bone of contention. The pound tracked a low of $1.1924 before retracing some of its losses to end the session at $1.1946.
The South African rand had a range bound session as risk conditions exchanged hands on the day. The move in the US dollar higher on the day saw the local unit have a brief step into negative territory at R18.2575/$. On the day, strong US labour data fueled a selloff in risky assets which saw the rand remaining committed to its negative trajectory as a risk off trend dominated. The rand closed off the session above opening levels at R18.2125/$.
On the data docket, we have local STD Bank Whole Econ PMI, with key data prints from Germany, the UK, Eurozone, and the US. The rand will most likely be steered by these data prints and any other market moving events.
Expected ranges for the day:
- USDZAR: R18.10/$ – R18.35/$
- EURUSD: $1.0590 – $1.0670
- GBPUSD : $1.1950– $1.2050