Rand Report 11/04/2022

Good morning?

There’s a longstanding joke that a sunny Monday is what follows two days of rain in KZN but that theory looks set to be tested today.?Forecasts suggest that the rather soggy weekend was just a warm-up for today’s downpour so hopefully the forecasters have this one wrong, although looking out my window they appear to be spot-on so far.??

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These are the mid rates at 6:50 today:?

USD = R14.66

AUD = R10.92

GBP = R19.10?

DXY = 99.90

EUR = R15.96

Brent Crude = $100.52 per barrel

Market News:

·????????The Rand is hoping for clear skies ahead with a decent late showing on Friday washing away most of the week’s losses.?We opened on Friday at R14.78 to the Dollar after suffering successive daily losses over the week, but move to R14.66 in the afternoon session meant we were effectively flat for the week which was a surprising turn of events.???

·????????Fading commodity prices had dented the Rand over last week, this as the Dollar Index moved ever higher to breach 100 points on Friday, but that all changed with resource prices firming again.?Chief amongst these was platinum and palladium after the London Platinum and Palladium Market bared metals processed by two Russian owned refining companies, and in doing so pushing the price of palladium up by 11% on supply concerns.?This was music to the Rand’s ears and we jumped from R14.76 to R14.63 before closing the week at R14.66.

·????????We also made an impressive move against the Euro on Friday and have managed to hold onto most of those gains going into today.?France kicked off the first round of their national elections over the weekend and nervous jitters around the far-right challenger, Marine Le Pen, hurt the Euro.?Le Pen has toned down her somewhat extreme narrative from when she last challenged Emmanuel Macron which included France ditching the Euro while curbing rights of Muslims.?But with her forecast to mount a more serious challenge this time around the Euro slumped sending our exchange rate to R15.91.

·????????The Euro has clawed back some of the losses this morning as it has been confirmed that Macron and Le Pen will face each other in the final vote on 24 April, but that Macron’s support remains substantially higher than Le Pen’s.?Market relief around the probable election outcome has been tempered by speculation ahead of the ECB’s monetary policy meeting this Thursday with the central bank faced with higher Eurozone inflation coupled with lower growth forecasts thanks to the war and its sanctions on Russia.?The ECB cannot come out as assertive as the FED, and this is capping Euro gains.??

·????????The following is from Reuters:??The Euro made a firm start to the week on investor relief that incumbent Emmanuel Macron led first-round voting in the French presidential election.?"It's a patchy bit of support," said Westpac strategist Imre Speizer, as investors are also grappling with an ECB unlikely to sound as aggressive as the FED in heading off inflation. "I think that biggest story of the two central banks being quite different is probably quite supportive of the Dollar in the longer run."?

·????????CNBC is running an article focusing on the dominance of the Dollar as the world’s reserve currency, a position that has repeatedly been predicted to end since the Dollar’s rise in 1971.?It looks like the status quo will not be challenged any time soon:??US markets play a substantial role in retaining the health of the currency across the globe. “A Dollar collapse actually is quite unlikely because the implication of a Dollar collapse is that you would have a real search for safety,” argued Eswar Prasad, a senior fellow at the Brookings Institution. “And the only really safe place to put lots of money remains the US”

·????????Local market data today sees our February manufacturing data at 1pm which is forecast to come in strong thanks to easing lockdown restrictions.??

·????????Possible USD mid rate trading ranges in the Rand today are R14.50 and R14.80

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