October in a US election year is typically associated with downside moves for stocks as uncertainty leading up to the big event in early November weighs on risk sentiment, but so far that hasn’t been the case this time around.? The Rand is hoping that risk-on sentiment stays strong, although cracks do seem to be appearing.?
These are the mid rates at 5:50 today:
Brent Crude = $74.09 per barrel
- The Rand started the week on the back foot but our losses weren’t too bad when looking at the gains posted by the Dollar Index.? We opened at R17.58 to the Dollar and slipped to R17.66 twice during the day before closing at R17.62, but warning signs around further losses are definitely flashing.?
- Two weeks from today the US goes to the polls and it finally looks like all the election hype is having an impact on the market.? While the outcome is too close to call recent positioning has shifted slightly towards a Trump victory, and with his tariff and tax policies likely to keep inflation sticky which would limit the FED’s ability to cut interest rates that has pushed the US 10-year Treasury yield up to 4.19% while supporting the Dollar.? Yesterday the Dollar Index broke above 104 for the first time since the 2nd of August and the Rand will do well just to tread water in this environment.?
- The Dollar is unquestionably on the march higher, this as it has risen in 14 of the last 16 trading sessions.? Sources of support seem to be coming from all angles at the moment with the Trump Trade, escalating tensions in the Middle East, FED speak around cautious rate cuts and robust US market data all coming together to create an environment perfect for Dollar strength.? It’s crazy to think that just three weeks ago the Rand was about to break below R17.00 thanks to a bigger than expected FED cut in late September coupled with stimulus news out of China, but those days seem like a distant memory now.?
- Recent US data releases along with Q3 corporate earnings thus far have comprehensively beaten expectations to the upside and that has resulted in the Atlanta FED GDP tracker to be revised higher with the Q3 annualised GDP print now expected to come in at 3.4%.? This strength has filtered into the tone used by FED members with four speakers yesterday agreeing that further rate cuts are warranted, but in keeping with their colleagues they remained vague as to the pace of these cuts.? The market continues to adjust to the increasing prospect of just one more cut this year, an adjustment that is keeping the Dollar well bid while making any gains for the Rand extremely difficult to come by.
- The following is from CNBC and talks to a more circumspect FED providing a tailwind for the Dollar:? The US Dollar clung to a two-and-half-month high on Tuesday on expectations the?FED?will take a measured approach to interest rate cuts, while a close battle in the upcoming?US election?kept investors on edge. “We think consecutive 25 bp cuts are quite likely in November and December, but we see more uncertainty about the pace next year,” Goldman Sachs analysts said in a note. “In part because of the election and in part because if the growth data remain strong and the unemployment rate remains stable for a few months, the FED could consider slowing the pace at some point.”
- No local market data today.
- Possible USD mid rate trading ranges in the Rand today are R17.50 and R17.80.
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