MARKEYTNEWS 02/09/2019

Good morning

Spring has sprung and if anything it will be nice to have noticeably lighter mornings which is a massive help when getting our lives going each day. The Rand will also be cheering a new month which historically has been kind to our currency.

These are the mid rates as at 8:20 today:

USD = R15.20

AUD = R10.22

GBP = R18.50

NZD = R9.58

EUR = R16.70

Brent Crude = $59.65 per barrel

Market News

• The Rand pulled out all the stops on Friday and managed to turn a rather boring week into a good one. We had spent most of the week trading around R15.35 to the Dollar and we opened Friday at R15.34, but that proved to be the worst level on the day as we traded progressively stronger to close the week at R15.18.
• Most of Friday’s move was thanks to an easing in market jitters as both the US and Chinese trade officials tried to present a united front in resolving the drawn out trade war. It was confirmed that face-to-face talks would go ahead in September and chatter about a de-escalation of imminent tariff increases saw emerging market currencies like the Rand get a much needed boost.
• The US market is closed for Labour Day today so Rand / Dollar movements will be muted, but we could see some volatility tomorrow as Trump did not bow to pressure from various sources and went ahead with the increased tariffs on Chinese goods as of yesterday (September the 1st). China immediately implemented retaliatory tariffs and this could unwind our Friday gains when global markets resume their Dollar trades tomorrow.  
• Bloomberg is running an article suggesting that the Rand could be in for a recovery over September. Historical data shows that we have suffered losses against the Dollar over the month of August in 8 of the past 10 years, but in 6 of those 8 years we have rebounded nicely in September. Negative news from home and abroad were the culprits last month but with the potential for better news in September here’s hoping for a move back below R15.00 to the Dollar.
• Speaking of positive news the Rand will be firmly fixed on our second quarter GDP print which is announced by Stats SA tomorrow. Q1 2019 was a shocker with a contraction of -3.2% largely due to stage 4 load shedding, but with our power supply stabilising over Q2, and with activity across retail, mining and manufacturing picking up, predictions are calling for an expansion of 2.5%. A strong Q2 GDP print tomorrow should support the Rand.
• The following is from Business Day: Data on Tuesday is expected to confirm that SA has avoided a technical recession, with economists expecting a rebound in GDP in the second quarter. “Having tracked real GDP throughout the second quarter’s high-frequency data releases, it has been clear for some time now that the economy would rebound and thus escape a technical recession. Sector-wise, we expect positive prints across the majority with mining and manufacturing leading much of the rebound,” Citigroup economist Gina Schoeman said in a note.
• Local market data today sees our new vehicle sales for August. 
• Possible USD mid rate trading ranges in the Rand today are R15.05 and R15.35.