Rand Report 17/01/2025
Good morning
Developments in the US are ensuring that the Dollar’s dominance is firmly in place but the Rand usually finds support when we get good news out of China and hopefully that remains the case after Chinese GDP data beat expectations earlier this morning, although there’s no sign of an encouraging pull through to our exchange rate just yet.??
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These are the mid rates at 5:50 today:
USD = R18.80
AUD = R11.68
GBP = R23.00
DXY = 108.94
EUR = R19.37
Brent Crude = $81.60 per barrel
Market News:
·???????? Not a lot of movement for the Rand yesterday as we opened the day at R18.78 to the Dollar, fell to R18.89 but then recovered back to R18.80 by the close of play.? But when looking at the week as a whole things are significantly better than Monday’s worst level of R19.23, and barring a horrible collapse today it looks like we are about to notch up a winning week against the Dollar for the first time in six weeks.??
·???????? One gets the feeling that activity in the currency market has slowed down somewhat as traders wait for Donald Trump’s inauguration on Monday, and more specifically, whether he will come out all guns blazing when it comes to tariffs, or whether he’ll adopt a more measured approach.? But there have been a few items for the market to digest this week, developments that have weighed on the Dollar a little thus allowing the Rand to post gains.??
·???????? The biggest headlines of the week have been softer than expected US data points which have shifted the market’s initial prediction of just one FED rate cut in 2025 to at least two, a shift that has contributed to the Dollar Index falling from 110.17 on Monday to 108.94 this morning.? US producer and consumer inflation readings both came in a touch lower than forecast and then yesterday their weekly initial jobless claims report showed more Americans filing for benefits than was expected, and with bets of a second rate cut this year gaining traction that has pulled the Dollar lower.
·???????? Adding pressure to the Dollar was comments by FED member Christopher Waller yesterday where he said he sees the possibility of three, or even four rate cuts this year should inflation ease as he is predicting.? Of course Waller is just one member of a large FED team, and he also countered by saying that inflation might not move lower for a number of reasons, but the market was not expecting any FED member to openly talk about multiple rate cuts and this would certainly have weighed on the Dollar.
·???????? We may have chipped away at the Dollar this week but our exchange rate remains uncomfortably high, this as the Dollar is still very strong.? The following from Reuters suggests that meaningful gains in the near term might be hard to come by:??Against a weighted basket of several currencies, the Dollar is the most overvalued it has been in 55 years, according to Bank of America Global Research. Typically, such a significant rally would attract Dollar bears anticipating a reversal, but few investors currently believe it is wise to challenge the rising Dollar. "We continue to see the Dollar as fundamentally overvalued, but, at least in the near term, it is hard to come up with catalysts that would make the Dollar weaken," said Brian Rose, senior US economist at UBS Global Wealth Management. The presidential inauguration on Monday is one big reason holding back Dollar bears, investors said.
·???????? No local market data today.
·???????? Possible USD mid-rate trading ranges in the Rand today are R18.65 and R18.95.
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