If you want your threats to be taken seriously, and therefore successfully used as motivation to achieve your objectives, then you need to follow through with them at some point.? It looks like we might be at that point now with tariff deadlines looming large while language out of Washington suggests that it’s still all systems go.?
These are the mid rates at 7:25 today:
Brent Crude = $73.22 per barrel
- The week has been a struggle for the Rand as we’ve given up ground day after day and find ourselves at R18.49 to the Dollar going into the week and the month’s final session.? Fortunately we are still likely to post a monthly gains as we opened proceedings at a terrible R19.03 in early Feb.!!!
- Is complacency by the market coming back to bite us or are there more twists in the tail? We’ll only know early next week but for now it looks like the market has miscalculated the chances of tariffs actually being implemented and suddenly there’s a mad scramble following confirmation from the Trump administration that the 4th of March is still a go.? Trump himself confirmed that the 25% tariffs on goods from Canada and Mexico are still on track while he threw an additional wrinkle into the mix when saying that an additional 10% will be slapped on Chinese goods which will take them to a cumulative 20%, confirmations that the market had hoped would be delayed further and risk-off sentiment exploded when they weren’t.
- The Dollar Index enjoyed its biggest daily jump since the 18th of December yesterday as tariff fears rattled the market and predictably this development has put pressure on the Rand and all other risk assets.? The market is now grappling with the prospect of a global trade war that is about to escalate, especially as Trump also touted a 25% tariff on cars coming from the EU in recent days, and with Canada and Europe both vowing to react in kind should the US proceed this has suddenly brought concerns around global economic health to the fore.? In times like this the Rand has nowhere to hide.?
- The following is from CNBC and suggests more volatility ahead:? The Dollar jumped on Thursday and was poised for its biggest daily percentage gain in more than two months as U.S. President?Donald Trump’s latest tariff comments overshadowed signs of slower economic growth. "It's a world where people do not know what's going on, so they will wait for clarity before they commit to bigger investments, and that leaves foreign exchange a little bit sidelined and a little bit more prone to these kind of quick catch-ups," said Bob Savage, head markets strategist at BNY in New York. "Tariffs will confuse people about what it means for the economics of the world and who's going to get hurt the most and who wins and who loses, and there's going to be a lot of noise and dust to figure out before anyone comes through all of that."
- The excerpt above also references “signs of slower economic growth” and fortunately for the Rand this other focal point for the market would have saved us from deeper losses yesterday.? At a US market data level the past few weeks have been characterised by weaker than expected releases and yesterday was no different as 225?000 initial jobless claims was the call but a much larger 242?000 were reported.? Added all together these recent data points suggest a cooling US economy and economic concern is exactly the environment where the FED would jump in with rate cuts to stimulate activity, and with bets of multiple cuts increasing that will cap some of the Dollar’s gains.?
- Local market data today sees our private sector credit at 8:00 followed by our balance of trade at 2pm.
- Possible USD mid rate trading ranges in the Rand today are R18.35 and R18.65.
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