Rand Report 28/04/2021

Rand Report 28/04/2021

Good morning

Crocs shoes, remember them? The foam clogs are making an impressive comeback thanks to COVID and people’s shift to comfortable work-from-home attire. Sales are soaring and their share price is up 333% in the past 12 months, high fashion is under serious assault!!! 


These are the mid rates as at 7:30 today:

USD = R14.40

AUD = R11.15

GBP = R20.00

DXY = 91.00

EUR = R17.39

Brent Crude = $66.42 per barrel


Market News:

We may be enjoying a shortened week but the Rand has taken a bit of a kick in the shins. Thin trade on Monday saw the Rand bounce around the R14.23 level but local and international factors have seen us fall to R14.40 this morning.

On the local front there are a few nervous jitters as Cyril Ramaphosa takes the Zondo Commission hot seat today and tomorrow. Ramaphosa has actually set aside 4 days in his diary which suggests that things could overrun, and his unwavering support for the commission since inception is proof that he values the enquiry. But the big question is Ramaphosa was appointed as ANC deputy president in 2012 and was their second in command throughout the subsequent state capture years, so what did he do to stop it? And will he come out of this week’s grilling unscathed? Nervous times for the Rand indeed. 

Ramaphosa will grab our local headlines this week but all eyes internationally are on the FED’s monetary policy announcement later tonight. The FED went into red alert mode 14 months ago now and have done an admiral job in supporting the US market throughout their COVID induced turmoil, but the US market is recovering fast and the FED will at some point have to indicate a change in thinking. Most analysts agree that tonight is not the night for any changes, and the Dollar should stay soft as a result (Rand positive), but as always the interpretation of even a different word or two in Jerome Powell’s press conference could spark volatility.  

The following is from Reuters and talks to possible Dollar strength if Powell signals a change: "The FED is widely expected to maintain current policy settings on Wednesday, but traders are well aware that a hawkish shift - an acknowledgement of underlying economic strength - could trigger renewed Dollar upside," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto. "If signs of optimism leak through in the official statement or during the press conference, investors are likely to bring tapering expectations forward and drive Treasury yields upward. Awareness of this risk is keeping traders parked in the Dollar."

The Rand is hoping that Powell remains predictable and dull, just as he has been over recent FED meetings, and the following from CNBC suggests risks of a surging Dollar tonight are low: The FED has said it will tolerate higher inflation and it will look at an average, hoping for a period of consistent 2% or better before raising interest rates. “The FED has made clear it won’t raise interest rates until the inflation rate has been at its target for a year or has moved above its target for some time,” said Tony Crescenzi, Pimco executive vice president. “By this definition, it doesn’t look like the FED will raise rates until 2023 or early 2024.”

No local market data today.

Possible USD mid rate trading ranges in the Rand today are R14.25 and R14.55. 


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