Joe Biden is on a mission to prove he is fit office in his election run in but two high profile gaffes yesterday have left more questions than answers.? Not only did he refer to Kamala Harris as “Vice President Trump” but he also introduced Ukrainian president Volodymyr Zelenskyy at a NATO event as “President Putin”.? ?
These are the mid rates at 5:55 today:
Brent Crude = $85.63 per barrel
- No such stumbles for the Rand as we, along with all other currencies, made decent inroads against the Dollar yesterday afternoon.? The all-important US inflation report delivered exactly what the FED wanted to see and the immediate result was a softer Dollar, and this allowed the Rand to surge from R18.11 to the Dollar before the reading down to R17.96.?
- Jerome Powell and his FED members have routinely told us that they need to see more evidence that inflation is on a sustainable path towards their 2% target before embarking on their much anticipated interest rate cutting cycle.? Yesterday’s consumer inflation report then was of heightened importance, and fortunately for the Rand things went our way across the board with both the headline and core CPI numbers coming in lower than forecast at the year-on-year and month-on-month metrics.? With inflation having steadily declined in recent months, and with the headline reading now at 3.0% which is its lowest reading in over a year, it is becoming more and more apparent that the FED have all the data they need.
- The Dollar Index’s reaction to yesterday’s CPI report was instant as it fell from 104.86 to 104.19, and the Rand moved below R18.00 to the Dollar for the first time since our post-election euphoria.? Of particular importance in the US data was that the month-on-month headline reading actually fell by -0.1% which is its first contraction in over four years, and this along with softer readings across the board meant chances of a September rate cut jumped from 73% before the report to 93% afterwards.? Increased speculation of lower US interest rates just a few months from now delivered a direct hit to the Dollar.?
- The following is from Reuters and suggests we might get an official nod to looming rate cuts from the FED at their next policy meeting in late July:? US consumer prices fell for the first time in four years in June amid cheaper gasoline and moderating rents, firmly putting disinflation back on track and drawing the Federal Reserve another step closer to cutting interest rates in September. "Barring rogue price data in July, the FED has a checkered flag to reduce rates in September," said Brian Bethune, an economics professor at Boston College. "This guidance will be solidified at the July meeting."
- The week’s main event is behind us but there are still two items for the currency market to keep an eye on before we can close for the weekend.? Firstly, there is a lot of speculation swirling around that Japanese authorities used yesterday’s lower than expected US CPI report to step in and amplify the Yen’s reaction.? We all strengthened against the Dollar but the Yen surged way more than anyone else and this suggests something else was at play, and the market is on alert for any follow up measures if Japanese authorities are indeed selling Dollars to buy the Yen. We also get US producer inflation (PPI) at 2:30pm which will probably be overshadowed by yesterday’s CPI report, unless PPI comes in much lower than forecast.?
- No local market data today.?
- Possible USD mid rate trading ranges in the Rand today are R17.85 and R18.15
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