The US dollar maintained its bearish stance yesterday as market participants priced in the possibility of a pause in rate hikes from the Fed, whilst the rates market priced in a 25bps hike. The US dollar stepped into negative territory from open, weaking to 103.002 intraday. Despite seeing some recovery in the latter session, the index failed to significantly lift its head above opening levels and closed off the session weaker at 103.226.
The move in the US dollar lower yesterday saw the euro extend its gains from open, as risk sentiment remained fragile due to the banking crisis. The single unit edged higher on the day, strengthening to $1.0785 intraday as focus shifted to the Fed’s rate decision due today. The euro closed off the session in positive territory at $1.0770.
Pound Sterling stepped into negative territory from open as focus shifted to the BoE’s rate decision later on this week. Market currently anticipates a final rate increment from the central bank as the banking crisis remains a major obstacle. The pound weakened to $1.2180 intraday and failed to pull itself into positive territory, closing off the session weaker $1.2218.
The local unit ushered in the new week on shaky grounds on Monday, weakening to a high of R18.6025/$ intraday as the currency was heavily weighed by the National Shutdown over the lack of jobs, the energy crisis, and a call for the resignation of President Cyril Ramaphosa. The local unit extended its losing streak into yesterday as well while the local market was away to commemorate Human Rights Day, with the looming Fed rate hike announcement taking precedence on the day. The rand closed the session at R18.5275/$ on Monday and registered a close of R18.56/$ yesterday.
On the economic calendar today, we have domestic CPI figures and the Leading Indicator print. Internationally we anticipate various data releases from the UK as well as the much-anticipated US interest rate decision. The rand will most likely take its direction from these events.
Expected ranges for the day:
- USDZAR: R18.30/$ – R18.70/$
- EURUSD: $1.0720 – $1.0810
- GBPUSD: $1.2150 – $1.2270