The dollar index ended in the red and traded lower on the back of high inflation figures, despite slightly recovering in the session as Silicon Valley Bank fears ease down. Headline CPI for February increased by 6.0% YoY, in line with market expectation but lower than last year’s print of 6.4%. Similarly, headline CPI for February increased by 0.4% MoM, in line with market expectation but lower than last month’s prior of 0.5%. Whilst core CPI MoM for January increased by 0.5% vs an expected 0.4%. These inflation figures have now sparked an expected 25 bp hike at next week’s MPC. The dollar reached a high and low of 104.049 and 103.497, respectively. Thereafter, it closed at 103.597.
The euro strengthened in the session for the fourth consecutive session ahead of Thursday’s much-anticipated ECB rate hike decision, where the market anticipates a 50 bp hike. Furthermore, the shared currency had a day of fluctuation as the dollar slightly pulled back before it lost ground again. It ended in the green at $1.0732 after it reached a high of $1.0749.
The pound sterling took a knock and weakened after increasing for four previous consecutive sessions ahead of today’s much-anticipated UK budget presentation. The sterling was placed under pressure as the 3 months average weekly earnings for January rose by 5.7%, in line with market expectation but lower than the prior increase of 5.9% – signalling a slowed pay growth in the UK. However, UK unemployment rate for January rose by 3.7%, lower than an expected 3.8%. The sterling ended in the red at $1.2158 after it touched a low of $1.2203.
The South African rand extended its reach into positive territory yesterday as the unit continued to ride the market’s positive risk-on tide, which saw the rand strengthening to its intra-session low of R18.0450/$. Better than expected domestic manufacturing output print to 1.1% MoM, paired with a rising mining production print to 4.4% MoM also played in the unit’s favour. After opening at R18.2075/$, the rand closed the session in the green at R18.12/$.
On the data cards today, we have local Retail Sales figures out today and key data prints from the US and Eurozone. The rand will continue to track these data releases as well as other local and global headlines.
Expected ranges for the day:
- USDZAR: R18.00/$ – R18.30/$
- EURUSD: $1.0680 – $1.0800
- GBPUSD: $1.2070 – $1.2250