Inflation Thursday is here and the Rand will be watching the telly through closed fingers this afternoon, this as US producer inflation yesterday set the tone going into today.??
These are the mid rates at 6:20 today:
Brent Crude = $92.46 per barrel
- The Rand had been trading in a narrow range around the R18.20 mark since Monday morning with the currency market seemingly on hold ahead of today’s inflation print, but that changed yesterday as we fell to a fresh 2-year low of R18.33 to the Dollar.
- All eyes may be on the US consumer inflation number this afternoon but yesterday their producer inflation print (PPI) jolted the market a little.?Headline PPI has been steadily coming down since peaking in March this year but September’s reading caught the market’s eye as the month-on-month figure was forecast to come in a 0.2% but actually increased by double that at 0.4%.?While the FED focuses on consumer inflation, such a sharp increase in producer inflation would not have gone unnoticed and equities fell while the Rand sold off to hit R18.33 in the face of renewed Dollar strength.??
- Fortunately, capping the Rand’s losses was a comment in the latest FED minutes which gave the market a glimmer of hope that the FED is not a runaway train totally oblivious the economic pain that ever tighter monetary policy will bring.?To be sure, the minutes were hawkish in confirming that the FED will continue hiking rates to bring inflation down and then hold rates steady for some time, but they also said the FED would take “the risk of significant adverse effects on economic outlook” into account when deciding on the size and pace of future rate hikes.??
- The following is from Reuters and talks to this ever so subtle change in tone from the FED:??The greenback pared gains after minutes from the last FED meeting showed some dovish undertones. Several participants noted the importance of calibrating the pace of further tightening to mitigate the risk on the US economy, the minutes said.?"Maybe there is a bit of hope within the minutes that basically officials are weighing the risk of going too hard or going too high on hiking," said Juan Perez, director of trading at Monex USA in Washington.
- The week’s main event comes at 2:30pm today as US CPI for September is announced.?Expectations call for the year-on-year reading to fall from 8.3% to 8.1% while the month-on-month figure is forecast to tick up by 0.2%, and one gets the feeling that if the numbers come in at these levels or higher then the Dollar will strengthen.?Of course the Rand is hoping for a surprise to the downside so hopefully yesterday’s hotter than expected PPI reading is not a harbinger of things to come today.??
- Local market data today sees our mining production stats for August at 11:30
- Possible USD mid rate trading ranges in the Rand today are R18.10 and R18.40.?