We’ve made it to Friday and after wild swings for the Rand earlier in the week yesterday was strangely quiet as we drifted sideways.? It may be the last trading session of the week but with the prospects of coalition updates ever present, and with the US jobs report this afternoon, the chances of us enjoying a quiet ride into the weekend seem slim.?
These are the mid rates at 5:50 today:?
Brent Crude = $79.97 per barrel
- After bouncing around for a few days yesterday was characterised by inactivity in the Rand.? We opened at R18.90 to the Dollar and while there are headlines pointing out that coalition concerns have pushed us to R19.00 we were only at this level for the briefest of moments before pulling back into the R18.90’s, and we closed the day out at R18.93.?
- Not much has changed on the local front as we wait to see what the ANC will do when forming a coalition government.? Continued chatter about a government of unity is keeping the Rand at elevated levels, this as the market is concerned about any EFF or MK involvement when it comes to future policy setting, but as yet nothing has been confirmed so we are stuck in a holding pattern.? The first week of a two week deadline to finalise government plans is fast drawing to a close so while we might not get any news today one would assume that next week will be rather lively.?
- The following is from Business Day and reminds us that, as far as the Rand is concerned, a several party “government of unity” is not good news:? The local currency touched R19/$ in intraday trade — the weakest level since April 26 amid political uncertainties.?The move comes after the ANC proposed a government of national unity for the next five years. A TreasuryOne currency strategist said earlier markets are concerned that Jacob Zuma’s MK party, along with the radical EFF, will be part of this government and what the impact might be on policy.?“Traders are likely to remain on edge until there is some certainty on the way forward and we expect trading in the Rand to be fairly volatile and headline-driven in the short term,” he said.
- On the international front things went well for us as the ECB delivered a hawkish rate cut while data out of the US was once again weaker than expected.? That the ECB lowered interest rates was not major news in itself, this as bank officials had clearly been messaging this move for some time, but the Euro was exposed to their language around further cuts.? Luckily not only did ECB president Christene Lagard confirm that they are not on a predetermined path to cutting again this year but the bank actually raised its Eurozone inflation forecast which was a big surprise given that they cut rates thanks to inflation having come down.? A rate cut should have been Euro negative but it inched higher on these hawkish comments, and in so doing weighed on the Dollar.
- Things also went well for the Rand in the US session as their initial weekly jobless claims report was expected to dip slightly from 221?000 to 220?000 but it increased to 229?000 which is yet another sign that cracks in the labour market are appearing.? This coupled with much fewer than forecast new jobs in May as per a privately run jobs report released on Wednesday meant the Dollar Index sank back down to 104.09 and would not have put any pressure on the Rand during our time of political angst.?
- The week’s main economic event awaits us at 2:30pm and with forecasts calling for 190?000 new jobs in the official US monthly jobs report, and with the unemployment rate expected to remain steady at 3.9%, any significant deviations from these will trigger volatility in the currency market.? Simply put, if we get fewer jobs and unemployment going above 4% for the first time in 27 months then the Dollar will fall while more jobs and an improvement in unemployment will mean a difficult end to the week for us.?
- Local market data today sees our foreign exchange reserves at 8:00.?
- Possible USD mid rate trading ranges in the Rand today are R18.80 and R19.10.
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CA(SA) | Junior Manager at Deloitte Netherlands
9 个月Interesting read Connar. ????