It’s back to business as usual today for the currency market with the US Dollar holiday now done and dusted.? There’s very little to report from yesterday’s price action with all the majors stuck in very tight trading ranges, but there was one highlight and that was the Rand breaking below R18.00 for the first time in over 10 months!!!
These are the mid rates at 5:50 today:
Brent Crude = $85.06 per barrel
- We weren’t expecting much movement yesterday thanks to the US being closed for their Juneteenth holiday but while the international currency market was stuck in limbo the Rand continued to trade on local political developments.? We opened at R18.03 to the Dollar and twice made it to R17.92 before closing the day at R17.95 where we open again this morning.?
- Cyril Ramaphosa was sworn in for his second term as SA’s president yesterday and the market is still giving the formation of our new government of national unity a big thumbs up.? The JSE All Share Index climbed above 81?300 points for the first time ever while the Rand made it to R17.92 on a day when all other currencies were hardly moving.? Whether further gains lie ahead, or whether we have strayed into overbought territory remains to be seen, but this is the best level for the Rand since the 1st of August last year and represents a 5.6% gain since our fall to R18.98 just after the elections in early June.? ?
- The Rand’s gains have been cheered by local analysts and the following is from Business Day:? “Positive developments around the Rand and local assets continue to reflect [a] broad investor reprieve as well as increased prospects for a shift towards progressing reformist domestic economic policies,” RMB said. “This includes the consolidation of key fiscal risk metrics and unlocking logistics and energy supply constraints after months of apprehension driven by speculation around the risks of a left-leaning ANC coalition alliance with either the EFF or the newly formed MK party.”
- Internationally there is not much to report other than it looks like the Bank of England (BoE) are becoming hard to please, and this helped support the Pound which eked out marginal gains on the day.? The FED, the European Central Bank and the BoE have spent the last two years telling us that elevated interest rates are in place to bring inflation down to 2%, and that rate cuts will only happen when inflation moves sustainably down towards this goal.? The ECB has already cut as their CPI sits at 2.6% and we know the FED isn’t that close to a cut with CPI at 3.3%, but yesterday UK CPI hit 2% yesterday for the first time in over three years yet the BoE is not expected to cut rates at today’s policy meeting. ?
- The UK’s inflation rate may have hit their 2% target but the underlying services component actually rose to 5.7% which why the BoE is not rushing to cut rates, and is therefore why the Pound found a modicum of support yesterday.? The following is from CNBC: ?The BoE is?widely expected?to keep rates steady on Thursday, and the focus will be on any guidance on how soon an easing cycle could begin. “There’s no doubt they keep rates on hold,” said Tony Sycamore, a market analyst at IG. “The headline numbers for inflation were probably a welcome relief, but there were upside surprises in services components again. Potentially they could open the door at the next meeting, but it still seems like we’re two meetings away from a potential rate cut there for me.”
- No local market data today.?
- Possible USD mid rate trading ranges in the Rand today are R17.80 and R18.10
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8 个月Enjoyed this report, looking forward to more.