Rand Report 08/09/2022
Good morning
Speaking at an economic forum in Eastern Russia Vladimir Putin said yesterday that Russia has not lost anything, and will not lose anything as a result of his Ukraine invasion.?An interesting statement given that 90% of Russia’s natural gas supply was previously sold to Europe, a client that is making plans to never buy Russian gas again.??
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These are the mid rates at 6:30 today:
USD = R17.30
AUD = R11.65
GBP = R19.91
DXY = 109.70
EUR = R17.29
Brent Crude = $88.76 per barrel
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Market News:
·????????Another day another fresh 2 year low against the Dollar while the Dollar Index set a new 2-decade record.?We opened at R17.39 to the Dollar and fell to R17.47 before a late recovery saw us end the day at R17.24, stronger than the open but still a very high level.??
·????????Dollar dominance turned the screws against all other currencies yesterday with the Pound, the Euro, the Yen and of course the Rand all wilting.?The Dollar Index jumped to 110.79, its highest level since June 2002, with the Pound falling to $1.1404, the Euro falling to $0.9864 and the Yen falling to ￥144.99, all levels not seen for a very long time.?Not surprising then that the Rand touched R17.47 although fortunately the Dollar Index has pulled back a little overnight.??
·????????The FED aside, one of the primary drivers of price action has been the diverging growth stories between the US and the rest of the world.?Everywhere is grappling with high inflation, but most other countries are also dealing with low, or even negative economic growth while the US keeps churning out positive data points.?Added to the mix was China reporting lower than expected export numbers which points to falling global demand and investors are flocking to the safe haven Dollar as a result which is pushing the Dollar ever higher, at the expense of everyone else.?
·????????The following is from Reuters:??The Dollar surged to a 24-year peak against the Yen and a 37-year high versus Sterling on Wednesday, as Japan's dovish monetary policy and Europe's economic problems contrasted with a relatively stronger US economy and a hawkish FED determined to bring down inflation. "Increasingly, it is becoming a growth story and really a crisis story. We have China continuing to have a COVID-zero policy, and if anything continuing to double down, locking down more cities," said Erik Nelson, macro strategist, at Wells Fargo in New York City. "Europe and the UK look like they are headed for a challenging couple of months, with recession very likely for both economies. The US, on the other hand, looks resilient."
·????????Europe’s energy crisis has heaped pressure on the Euro but there is a chance that we get some much needed Euro strength today which in theory should pull the Dollar down.?The European Central Bank delivers their latest monetary policy announcement with the hope that they will follow a recent global trend in hiking interest rates by 75bps, a size move that was almost unthinkable for the ECB just a few months back.?We wait to see how the Euro reacts, and what that means for our exchange rate with the Dollar.?
·????????Locally we have a busy day on the market data front with our Q2 current account, our business confidence reading for August and our July manufacturing production stats all being released.?There is also a chance that we get our Q3 consumer confidence reading, but this was originally pencilled in for release on Tuesday and now bounced to today, so let’s see if it actually materialises.?Despite the barrage of local releases the Rand remains at the mercy of Dollar movements, and with FED Chair Jerome Powell speaking later on that’s probably where the Rand’s fate lies.??
·????????Possible USD mid rate trading ranges in the Rand today are R17.15 and R17.45.?
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