Forex Market Report - 15 June
Good morning
The market loves certainty and will give you clear direction indicators when conditions are calm. Unfortunately last week was jam packed with risk events that saw uncertainty spike, and the resultant surge in volatility has seen the Rand bounce around as the market looks for direction.
These are the mid rates as at 8:10 today:
USD = R17.27
AUD = R11.74
GBP = R21.57
NZD = R11.06
EUR = R19.42
Brent Crude = $37.23 per barrel
Market News
- The Rand is being pulled in all directions as international factors weigh on sentiment. Friday looked like a recovery day as we moved from R17.28 to the Dollar down to R16.92, but the pressure is back on this morning as we fall to R17.27.
- Thursday last week was a rotten day in the market as currencies (except the safe haven Dollar) and equities sold off aggressively. The FED spooked investors with a particularly gloomy assessment of the US economy and that was quickly followed by “second wave” reports from across the US. These factors combined to slash 1800 points off the DOW Jones Index, a selloff that spilled over to our JSE, while the Rand fell by 4% against the Dollar. Believe it or not but it would have been better if Friday delivered a flat to negative performance which would have confirmed the market’s assessment on Thursday, but with US futures strengthening and the Rand pushing on to R16.92 that showed we are struggling for direction which has been confirmed this morning with a drop back to R17.27.
- South African’s are enjoying a shortened week this week but it looks like the Rand could be in for a bit of a slog. The list of flashpoints is growing and includes increasing infection counts in the US, FED members speaking including Jerome Powell testifying in front of the Senate, terrible news out of the US as another black man was shot dead by police over the weekend and subsequently declared a homicide and reports this morning of a spike in virus cases in Beijing. Roll these all up together and that becomes a perfect environment for Dollar strength while the Rand gets sold off.
- The following is from Reuters: Beijing is ramping up testing after a cluster of new coronavirus cases was confirmed at Xinfadi, which is said to be the largest food market in Asia. China’s capital had gone for almost two months with very few infections until a new case was reported on June 12, and since then the total number has climbed to 51. Several US states have also reported a record increase in new coronavirus cases and hospitalizations as officials pushed ahead with plans to reopen their economies. Another large outbreak could roil financial markets, which had been rallying recently on hopes for economic recovery.
- The UK and Europe enjoy a recovery milestone today as various boarders are re-opening while flights will start leaving UK airports for the first time in 2 months. There is definitely plenty to concern markets on this chilly Monday morning but there are also a few positives out there that will hopefully cap the Rand’s losses.
- No local market data at all this week so the Rand will be driven by developments in the various international stories as listed above.
- Possible USD mid rate trading ranges in the Rand today are R17.05 and R17.45.
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