"This is a sharp contrast to the past couple of years where crises seemed to come one at a time, and then you could just deal with them when they occurred, but now it seems to be 'everything, everywhere, all at once'." Chris Beauchamp, chief strategist at IG, summing things up nicely for the market with flashpoints all over the place keeping investors’ heads spinning.?
These are the mid rates at 6.45 today:
Brent Crude = $73.21 per barrel
- With a major risk event fast approaching some weakness in the Rand is to be expected, and that’s what we got yesterday as we opened at R18.36 to the Dollar, bounced around the late R18.30’s for most of the day before falling to R18.46 late on.?
- There always are a lot of moving parts in the world of finance but at the moment there seems to more than usual, and couple this with a healthy dose of uncertainty thanks to Donald Trump’s ever shifting policy headlines and that is making life uneasy for the market.? Trade uncertainty, which by default increases the risk of a global slowdown in economic activity, is hurting the Rand as a risk asset, but uncertainty in the US around trade, inflation and their labour market is also hurting the Dollar, and yesterday was one of those rare occasions where the Rand and the Dollar both lost ground on the same day.?
- The Dollar’s troubles are complicated to say the least.? Trump’s campaign promises to make America great again are, for the moment, doing just the opposite as the elevated uncertainty around his tariff and immigrations policies are pushing up concerns around inflation while Elon Musk’s DOGE purging of inefficiencies in the US government means there are real concerns around how this will impact both the US unemployment rate as well as economic activity given how big a player the government is in GDP performance.? Fears of an easing US economy and higher unemployment levels are weighing on the Dollar Index as it wallows near an 11-week low.?
- US data has come in below expectations of late and yesterday saw their consumer confidence index drop by 7 points which is its biggest monthly decline in over three years, and it took the index down from 105.3 to 98.3 when a drop to 102.3 was the forecast.? Heightened uncertainty around tariffs and what these could mean for inflation coupled with the tens of thousands of government jobs that are being culled means it is no surprise that consumer confidence is weak, and for the time being this could continue to weigh on the Dollar until we get a positive headline (maybe their inflation report this Friday?)
- The following is from Reuters talks to the outsized fall in US consumer confidence:? US consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February while 12-month inflation expectations surged, offering further signs that Americans were growing anxious about the potential negative economic impact of the policies of President Donald Trump's administration. "Americans are increasingly pessimistic about the outlook. No Federal government has ever before threatened government workers with mass firings and it is starting to scare the daylights out of consumers," said Christopher Rupkey, chief economist at FWDBONDS. "The economy could well ground to a halt in the first quarter of the year as consumers stay home."
- Unfortunately the Rand was unable to take advantage of a weaker Dollar yesterday as all the uncertainty that is weighing on the greenback is also negative for emerging market currencies like ours.? Of immediate concern for us is the looming deadline of March 4th when Trump is set to levy a 25% tariff on all imports from Canada and Mexico, and one would assume that we won’t see any gains for the Rand until these tariffs are (hopefully) called off at the last minute.?
- Local market data today sees our CPI report at 10:00.?
- Possible USD mid rate trading ranges in the Rand today are R18.30 and R18.60.
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