Euro, South African Rand Bounces Ahead of ECB Head, Christian Lagarde’s Speech

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Azeez Mustapha

Updated: 13 October 2022

The week started on a quiet note for major currencies after the Tokyo event while investors eagerly await the first official speech from Christian Lagarde, the new head of ECB.

Dollar
For currency pairs, the dollar maintained a significant price of 97.218, having dropped to 97.107 on Friday which is a low recorded between august to date. It hopes to reach a significant low of 97.033 recorded in August. The dollar had tried to bounce back on Friday after news of surprising US payrolls but its rise was undermined by a soft manufacturing survey which pulled it down. The greenback fared slightly better than the Chinese yen the previous week. The US dollar had been battling to maintain a stronghold after the federal reserves slashed interest rates last Wednesday.

Euro
Euro had started the week solidly at $1.1168 while almost nearing the October height of $1.1179 and a 200-day moving average of $1.1195.

Sterling
Sterling also maintained a significant price of $1.2935 after it bounced back to $1.2200 the previous month as investors remain less apprehensive about a Brexit hard blow in the face of the upcoming elections.

South African Rand
The rand reportedly rose up over a percent at 14.8650 per dollar, retracing back after last week’s sharp drop. The rise could be traced to the fact that investors heaved a sigh of relief following Moody’s latest decision as regards the country’s debt.

Chinese Yen
Safe havens currency, Yen, witnessed a drop as captured on Friday’s low of 107.87 while retracing back slightly to 108.23.

Impact of Interest rate slashing moves on major currencies
Analyzing the impact of interest rate cutting being undertaken by the central banks, an analyst put it that an imminent reduction in volatility among major currencies and this step seems unanimous thereby creating a common policy ground. Therefore currencies with the biggest interest rates like AUD, USD, NZD, and CAD will become weaker. This, therefore, could have prompted the losses recorded on USD and CAD the previous week.

Norwegian and Swedish currencies topped the gainer’s chart based on the stable interest rate and a predicted rise in months to come.

Ahead this week, Central banks in Australia and UK are holding decisive meetings on policy updates while the much-awaited speech of ECB head, Christian Lagarde is upcoming with analysts predicting that there might not be a significant policy change. Also, seven fed speakers are setting the stage for their speeches this week. Investors are also on the look-out for the eventualities of china –US trade talks.