You get big weeks in the currency market and then you get the week ahead, which is HUGE!!!? The Rand has started things off on the front foot, or more specifically the Dollar is on the back foot, but there is so much ground to cover between now and Friday afternoon that it will be very interesting to see where we end up.??
These are the mid rates at 5:50 today:
Brent Crude = $74.24 per barrel
- Last week ended with an eyebrow raising headline and that sets us up perfectly for the week ahead which will have market captivating headlines aplenty.? After making it to R17.54 during Friday’s session we then closed the week at R17.65 but early price action this morning sees us open the new week at R17.52.??
- Taking a brief look at Friday the main headline was the monthly US jobs report for October which was expected to drop from 254?000 new jobs in September to 115?000 last month so it was a serious miss to the downside when just 12?000 jobs was announced.? A report showing the fewest monthly jobs created since December 2020 would normally have seen bets of the FED cutting rates by 50bps coming firmly back onto the table at the Dollar’s expense, but October had two devastating hurricanes as well as prolonged strikes at Boeing as well as other companies in the aerospace industry which is why hiring was impacted so badly.? The market shrugged this report off as an anomaly while the Dollar actually strengthened.??
- Friday’s jobs report has already been forgotten about as the week ahead holds the US election tomorrow, the FED’s next policy announcement on Thursday and a four day meeting in China where their National People’s Congress is expected to announce major stimulus measures to the value of $1.4 trillion.? While the US election will dominate headlines, especially if the result is so close that we don’t get confirmation of a winner immediately after the vote, each of these events have the ability to move the currency market in a big way.? This is without doubt the biggest week of 2024 by far.??
- When it comes to the US election the Dollar has been steadily gaining ground thanks to the Trump Trade, with bets of a Trump victory proving to be a tailwind for the greenback as his policies around tariffs, immigration and taxation appear to be inflationary which would make it difficult for the FED to cut rates as far as the market is expecting.? But things changed yesterday with a respected poll showing Harris opening a wide lead in Iowa, a state that Trump easily won in 2016 and 2020, and with a Trump victory being questioned that has seen the Dollar Index fall back this morning allowing the Rand start the week at R17.52.??
- In fairness the election is too close to call, and we’ll probably see predictions oscillate between Trump and Harris over the final 24 hours, but while the eventual winner is the main focal point the market is also keeping an eye on which parties secure the Senate and the House of Representatives.? Recent elections have resulted in Republicans and Democrats each holding one of these levels of government and therefore political gridlock where major legislative changes cannot get passed, but if we get what’s known as a “red sweep”, or a “blue sweep”, tomorrow that will change the game significantly.??
- The following is from CNBC:?The Dollar slipped in Asia on Monday as investors braced for a potentially pivotal week for the global economy as the United States chooses a new leader and, probably, cuts interest rates again with major implications for bond yields. “It is widely considered that a Trump win will be positive for the USD, though many feel this outcome has been discounted,” said Chris Weston, an analyst at broker Pepperstone. “A Trump presidency with full control of Congress could be most impactful, as one would expect a solid sell-off in Treasuries resulting in a spike higher in the USD. A Harris win and a split Congress would likely result in ‘Trump Trades’ quickly reversed and priced out,” he added. “The USD, gold, bitcoin and US equity would likely head lower.”
- No local market data today.??
- Possible USD mid-rate trading ranges in the Rand today are R17.40 and R17.70.
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