Well that was quick, and very decisive!!!? The US election is pretty much done with just the confirmation of which party has won the House of Representatives outstanding so we can all turn our attention back to traditional market moving events, and they don’t come much bigger than FED policy announcements which we get later tonight.?
These are the mid rates at 5:50 today:
Brent Crude = $75.59 per barrel
- All things considered the Rand has come through the US election battered but not bruised, this as it looked like we were in for a real hiding early yesterday morning.? After falling to R17.80 to the Dollar with thoughts of a break above R18.00 not out of the question we then managed to claw back some of our earlier losses before closing the day at R17.61.?
- Once again the pollsters were wide of the mark with projections of the closest election in history evaporating when Donald Trump stormed to victory before our lunch time yesterday.? Their system requires the winner to claim 270 electoral college seats or more, and with Trump securing 294 seats to Harris’ 223 it’s fair to say that his triumph was emphatic.? Republicans have secured the Senate which is the upper level of US government while they have 208 seats in the House of Representatives, just short of the 218 needed but ahead of the Democrats 189 and with votes still being counted.? A red sweep looks like the most likely outcome and the market reacted accordingly with the Dollar on the front foot while US equites roared to record highs.?
- Trump returning to office has given US assets a major boost but the same cannot be said for the rest of the world as concerns around his “America first” policies take hold.? The following is from Reuters:? ?Wall Street tore to record highs on Wednesday and major stock markets around the world surged, while bitcoin hit an all-time-high and the Dollar was set for its biggest one-day jump in four years after Donald Trump was?elected US president. Outside the US investors were decidedly less euphoric, weighed by concerns that higher tariffs under Trump would hurt global trade and economic growth. "The market is definitely moving in line with the Trump playbook; stocks and small caps, in particular, are higher on the idea that Trump will be good for US companies," said Seema Shah, chief global strategist for Principal Asset Management in London. "Across emerging markets, you can see China and Europe are struggling with the idea that they could face higher tariffs, and US bond yields higher with expectations for a higher fiscal deficit and inflation."
- US elections will dominate news outlets and the market will continue to digest how his policies will influence Dollar price movements but we already have another major event to deal with, that being the FED’s policy meeting tonight.? Much has been written about Trump’s policies on immigration, taxation and tariffs being inflationary but it’s unlikely that his victory will have any impact on the FED’s probable decision to cut rates by 25bps tonight, but the market will closely watch Jerome Powell’s press conference for any clues around future policy moves given the new political environment.? The Dollar would take another leg higher if the FED is seen to move slower than is currently priced in, although Powell is a cool customer and will probably give nothing away just yet.?
- The following from CNBC suggests that Powell will avoid being dragged into policy speculation following Trump’s victory: ?“We think Powell will refuse to give any early judgment on the implications of the election for the economy and rates, and will seek to be a source of stability and calm,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI. In keeping with policymakers’ historical desire to stay above the political fray, Powell “will say the FED will take the time it needs to study the new administration’s plans” then will “refine this assessment as actual policies are developed and enacted,” Guha added.
- Local market data today sees our foreign exchange reserves at 8:00 and the FED’s policy announcement is at 9pm.
- Possible USD mid rate trading ranges in the Rand today are R17.45 and R17.75.
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