The votes have been cast and we now wait for the results to trickle in, and while it’s still very early in the process the market’s reaction to the initial figures has been emphatic.? Unfortunately this has not been good news for the Rand.? ?
These are the mid rates at 5:45 today:
Brent Crude = $74.70 per barrel
- Volatility in the currency market around the US election is what we expected and volatility is what we are getting.? Dollar weakness yesterday saw the Rand make it all the way to R17.35 but Dollar strength has come surging back with the Rand tumbling to R17.80 this morning.? ?
- Yesterday was a strange day as, with the world focused on the US election and with polls leaning back towards a Trump victory, the Dollar Index went on a steady decline event though the recent Trump Trade had been good for the greenback.? It’s unclear why the Dollar gave up so much ground but the effect was clearly seen in the Rand with us opening the day at R17.50 and then trading progressively stronger to touch R17.35 late on.?
- Unfortunately it looks like the Rand was being lulled into a false sense of security as the Dollar Index has come roaring back in early trade this morning while inflicting significant damage to our exchange rate.? The counting process still has a long way to go but at the time of writing Trump has secured 207 of the 270 electoral college seats needed to claim victory while Harris is trailing on 91.? Things could swing back in Harris’ favour as results from traditional Democrat states come in but for now Trump has a healthy lead and the market is reacting accordingly.? Another Trump term has widely been seen as positive for the Dollar, and with the Dollar Index jumping from 103.38 to 105.18 the Rand has been left with nowhere to hide.? ?
- The following is from Reuters and talks to a stronger Dollar based on the election results thus far: ?Analysts generally assume Trump's plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields, than Harris' centre-left policies. Trump's proposals would also tend to push up the dollar while potentially restricting how far the Fed might ultimately be able to cut rates. "As the early results come in, even though none of them are that surprising, we are seeing Treasury yields rising a little bit, the dollar strengthening, bitcoin up; kind of a classic Trump trade," said Brian Jacobsen, chief economist at Annex Wealth Management.
- There’s every chance that we’ll see a few twists in a tale before the final outcome is known but if we look at another predictive tool, US equity futures, things are clearly pointing to a Trump victory, for now. ?US stocks locked in impressive gains during yesterday’s trading session and futures are pointing to even bigger gains when the market opens later this afternoon.? Goldman Sachs published a note saying that the S&P500 would jump by 3% if we get a Trump victory coupled with a “red sweep”, where republicans secure control of Congress, and price action in equities is well on it’s way to that gain even though the result is still unknown.? Bitcoin, another Trump victory beneficiary, just hit a record high of $75?000.
- No local market data today and all eyes will be on the US election updates.?
- Possible USD mid rate trading ranges in the Rand today are R17.70 and R18.00.
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