UK Prime Minister Liz Truss has had the role for just over a month and already the knives are out thanks to her controversial policy announcements two Friday’s ago that rocked the UK and global financial markets.?Yesterday she said that finance minister Kwasi Kwarteng decided to scrap the top tax tier on his own in what’s being seen as an attempted sidestep, and somewhere Boris is sniggering into his cuppa.??
These are the mid rates at 6:25 today:
Brent Crude = $87.73 per barrel
- The Rand may also try the blame game but on Friday local factors joined up with international pressures to send us lower.?We closed the week at R18.10 to the Dollar, hopefully the month ahead has some good news for our currency.
- International factors are still the primary driver of Rand movements but our trade numbers on Friday didn’t help.?Our balance of trade for August was forecast to tick up from R24.8bn to R25.4bn and so the actual surplus of R7.1bn was quite a surprise and would have weighed on the Rand.?Last year the Rand took shelter under a massive trade surplus thanks to commodities exports surging while local import demand was subdued, but this year our total trade surplus is R163bn compared to the R325bn at the same time last year which is a clear signal that things are shifting.
- Not helping our cause was a stronger Dollar as the greenback made an attempt to claw back some of its losses from earlier in the week.?The Dollar Index ended up falling for the first week in three, this after the Pound and the Euro made comebacks after a disastrous start to the week, but on Friday the Dollar lessened its losses after the FED’s preferred measure on inflation came in hot.?The headline personal consumption expenditure (PCE) reading eased slightly falling from 6.3% to 6.2%, but the month-on-month number increased from 0.5% to 0.6% which means the FED can keep hammering away at inflation.
- The following is from CNBC:??The Dollar gained against the Euro on Friday after European inflation hit a record high and US consumer spending increased faster than expected. The FED, which has raised US borrowing costs faster in 2022 than any time since the 1980s, got one less reason to slow down. The personal consumption expenditures price index (PCE), which the FED targets at 2%, rose 6.2% year-on-year in August. “The inflation data today surprised higher once again. That will keep upward pressure on interest rates and the Dollar,” said Adam Button, chief currency analyst at Forexlive, a currency analysis firm in Toronto.
- The final quarter for 2022 lies in wait, and while anything is possible it looks like the volatility from Q3 could be with us for a while still.?The following is from Business Day:??Carmen Nel, macro strategist at Matrix Fund Managers, also has a pessimistic view, arguing that the market has not yet priced in all the bad news. “The fourth quarter will be another challenging one for financial markets amid a strong Dollar and waning global liquidity,” said Nel, adding that lower commodity prices and receding global liquidity could push the Rand weaker despite it already being undervalued.
- Local market data today sees our September manufacturing purchasing managers’ index at 11:00 with a slight fall from 52.1 expected.?We also get September’s new vehicle sales at 2pm.??
- Possible USD mid rate trading ranges in the Rand today are R17.90 and R18.20.?