Another day of banking woes enticed a risk-off mood which permeated through the market. Consequently, the dollar index made a turnaround and surged in the session amidst the drop in Credit Suisse’s (a Swiss bank) stock which led investors to flee to the safe-haven dollar. Although, there was a slight drop in the index after February’s Retail Sales data declined by 0.4% from an expected decline of 0.3%. This also prints lower than January’s 3.0% increase. Moreover, February’s PPI declined by 0.1% vs an expected increase of 0.3%. This also prints lower than January’s 0.7% increase. Nevertheless, the dollar index ended in the green at 104.646 after it peaked to a high of 105.103.
The euro came tumbling down on the back of the fall of Credit Suisse’s stock which sent jitters through the market and uplifted the dollar. The effect of this placed pressure on the European government bond and swap market, whereby the possibility of a 25 bp hike from the ECB has come into play. Today, all eyes will be on the ECB’s rate hike decision, but market expectation remains at a 50 bp hike. The euro dropped to a low of $1.0514 before it closed in the red at $1.0575.
Risk-aversion was the theme of the day – which prompted the pound sterling to lose further ground in the session. It weakened after Credit Suisse’s banking woes paired with last week’s SVB crash, prompted uncertainty. These current market risk events may continue to support the BoE’s dovish stance. The pound ended in the red at $1.2065, after it touched a low of $1.2009.
The local unit was hammered in yesterday’s session as the allure for riskier assets was a no show, triggered by the ongoing US banking sector’s crisis in tandem with the massive fall of Credit Suisse’s stocks, which left the market rattled. A declining domestic Retail Sales print to -0.80% also added to the rand’s woes. The rand weakened to a high of R18.5025/$ intraday and its attempts of a significant recovery fell short as global market were plunged into disarray. The local unit ended the day at R18.4175/$.
We have no local data releases today, internationally we have the headliner US Initial Jobless Claims print and the ECB’s interest rate decision. The local unit will take direction from these events, while keeping a close eye on the US and Europe’s banking sector’s turmoil
Expected ranges for the day:
- USDZAR: R18.30/$ – R18.60/$
- EURUSD: $1.0585 – $1.0685
- GBPUSD: $1.2060 – $1.2160