MARKET NEWS 24/10/2019

Good morning

It looked like the Rand was headed back to weaker levels as we quickly lost ground after the market open yesterday, but fortunately we managed to turn things around in the afternoon session.  

These are the mid rates as at 8:15 today:

USD = R14.64

AUD = R10.01

GBP = R18.91

NZD = R9.37

EUR = R16.30

Brent Crude = $61.12 per barrel

Market News

• The Rand has been trying to move stronger for some time and we finally managed to break into the low R14.60’s on Tuesday, but yesterday saw us give up most of those gains as we touched R14.70 by mid-day. Fortunately that wasn’t the end of the day’s play as the Rand promptly turned things around and closed back at R14.60 to the Dollar. 
• Locally we got some good consumer inflation news which would have helped turn the Rand around. Market forecasts called for a drop form 4.3% to 4.2% so the actual number of 4.1% was a pleasant surprise to the downside and moved CPI further below the SARB’s mid-range target of 4.5%. Lower CPI gives the Reserve Bank increased wiggle room when considering an interest rate cut and this would have been Rand positive. We will have to wait for the next MPC interest rate announcement in mid November to see what they do but for now the speculation is enough to support the Rand. 
• Internationally yesterday was a quiet one as the heated UK Brexit debate was put on hold by Boris Johnson while US-China trade headlines are receding as their negotiators interact behind closed doors to finalise the phase one deal details. This lack of news flow saw the Pound and the Dollar tread water and the Rand was little moved against these major currencies. 
• Regarding Brexit we are waiting to see how the EU responds to the UK’s request for a deadline extension and the Pound will surely react once their intentions are made known. The following is from Reuters:  “With Brexit on ice for now, attention has shifted to the EU to see if indeed it grants the UK more time – likely three months or less. While weaker, the bottom hasn’t fallen out of the Pound given that a no-deal Brexit has seemingly been taken off the table. Expecting the unexpected with respect to Brexit – and Sterling – remains a central theme,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
• Outgoing ECB President Mario Draghi will hold his final EU interest rate announcement today after 8 challenging years at the helm. The Euro has also flatlined ahead of today’s events but our exchange rate could fluctuate according to the following excerpt from Reuters:  The Euro held at $1.1132 with traders looking to Euro zone manufacturing and services data and the outcome of a European Central Bank meeting, both due later on Thursday. “Small improvements across France, Germany and pan-Eurozone and for both manufacturing, services and composite readings are the consensus expectation,” National Australia Bank’s Head of FX Strategy, Ray Attrill, said in a note. “EUR will be sensitive to deviations one side or the other of this.”
• No local market data today. 
• Possible USD mid rate trading ranges in the Rand today are R14.50 and R14.80.