The US dollar came tumbling down for a fourth consecutive day on Friday on the back of economic data prints that advocates for an easing of interest rate hikes. Non-Farm Payrolls increased by 311K in February. Despite surpassing market expectation of 205K by 106K, it declined from January’s print of 517K by 206K. Furthermore, February’s Unemployment Rate increased by 3.6% vs market expectation and prior print of 3.4%. Both data releases may signify a shrinking economy. However, Jerome Powell has previously stated that all economic data will be considered before an interest rate decision is made, nevertheless the market has priced out a 50 bp hike. Consequently the dollar ended in the red at 104.576 after it dipped to a low of 104.039.EUR
The euro maximized on dollar dips as a risk-off mood was welcomed into the market on the back of soft US data releases. Germany’s Consumer Price Inflation for February increased by 1.0%, in line with market expectation and last month’s prior. Even though Germany is a Eurozone powerhouse, the shared inflation for last month from the Eurozone will be more significant in terms of ECB’s rate hike decision. The shared currency ended in the green at $1.0643 after it peaked to a high of $1.070.
Like the euro, the pound sterling was also boosted by a declining dollar as the market anticipates an easing of US interest rates. Furthermore, UK GDP for January arose by 0.3% vs market expectation of 0.1%. It also exceeded a prior of 0.2%. The pound sterling reached a high of $1.2113 and closed at $1.2028.
The South African rand opened Friday’s trading session relatively firmer than the previous session, at R18.52/$, but was seen later in the day taking back most of the week’s gains despite the positive release of the US Non -Farm payrolls, which rose to 311k,coming out better than expected but lower than January’s print of 517k. This indicated that the FED will raise interest rates less aggressively than previously anticipated. The local currency hit a low of R18.19/$ and closed the day firmer at R18.33/$.
In the absence of domestic and international data, the rand will be guided by global headlines.
Expected ranges for the day:
- USDZAR: R18.0500/$ – R18.3300/$
- EURUSD: $1.0670 – $1.0800
- GBPUSD: $1.2060 – $1.2200