The US dollar extended its reach further in its earlier activities yesterday, finding support from additional monetary tightening sentiments at the conclusion of the Fed’s chair 2-day meeting. The dollar slightly gave up some of its gains in the latter parts of the session as investor’s shifted their focus to Friday’s Non-Farm Payrolls report for back-up to the Fed’s case while positioning for the likelihood of a 50bps rate hike. The dollar index tested a high of 105.883 before closing the day at 105.658.
The single currency remained relatively range bound throughout the session, hovering around the $1.0500 mark as it continued to battle with a somewhat stronger dollar. A revised Eurozone Q4 GDP print of 1.8% from an expected 1.9% further dampened sentiment towards the unit. After its day’s low and high of $1.0523 and $1.0573 respectively, the euro closed the session a touch below its opening at $1.0544.
The cable was also a casualty to the influx of dollar flows at the start of the session but managed to find its conviction and was seen stepping into positive territory. The pound edged to its intraday high of $1.1859 on the day as it continued to contend with hawkish outlooks from the Fed and ECB. Pound Sterling closed the day on the front-foot at $1.1842.
Despite a poor GDP print from the previous day, the South African rand saw a tiny intraday improvement yesterday after declining to depths we haven’t seen in almost 3 years and reached a low of R18.4750/$. On the heels of US federal Reserve Chair Jerome Powell’s hawkish remarks, that the US may need to raise rates at a quicker pace, significantly than anticipated, the rand was subsequently seen retracing back to a level above R18.6000/$ to close off the session at R18.6325/$.
On the data card today, we have the local current account. On the international front, we have China’s inflation print and the initial jobless claims out from the US. Global economic developments will serve as a guide for the local unit.
Expected ranges for the day:
- USDZAR: R18.4000/$ – R18.7000/$
- EURUSD: $1.0500 – $1.0600
- GBPUSD: $1.1700 – $1.1900