Rand Report 29/04/2024

Good morning

The waiting is almost over!!!? In a month from today South Africa will hit the voting stations and from there the endless questions and scenario planning debates will be answered, although one would imagine that it will take at least a few days for the official election results to be known.??

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These are the mid rates at 6:10 today:

USD = R18.79

AUD = R12.34

GBP = R23.54

DXY = 105.81

EUR = R20.14

Brent Crude = $88.70 per barrel

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Market News:?

·???????? The Rand is voting that our current run of good fortune in the currency market continues, this after we had yet another interesting reaction to US data that should have sent things the other way.? We managed to hit R18.74 to the Dollar on Friday afternoon, comfortably our best level of the week, and while April was shaping up to be a shocker for the Rand we now have a good chance of closing tomorrow below the month’s opening level of R18.95.??

·???????? Last week was a curious one in the currency market as we had Dollar weakness on Tuesday when strength was expected and then Dollar strength on Thursday when weakness was the consensus call, and this strange turn of events continued on Friday when US inflation headlines suggested Dollar strength would send the Rand reeling but Dollar weakness ensued.? With a move down to R18.74 the Rand is certainly not complaining and it remains to be seen if we can keep this momentum up, or whether a critical event on Wednesday has other plans for us.??

·???????? One would have been forgiven for thinking that the Rand was about to take a direct hit on Friday afternoon as both of the personal consumption expenditure (PCE) readings came in above expectations which further underlined how US inflation is proving sticky in the FED’s quest to hit 2%.? The headline PCE reading was forecast to move higher from 2.5% to 2.6% but the actual number came in at 2.7% while the core reading was forecast to fall from 2.8% to 2.7% but it stayed steady at 2.8%.? Higher inflation means the FED is no closer to the confidence needed before they can cut interest rates, but there was a component in the report that showed consumer spending is still very robust and that was enough to send equities significantly higher while weighing on the Dollar.? ?

·???????? Close to 70% of US GDP is driven by the consumer and so healthy spend levels overshadowed any negative sentiment surrounding the higher inflation readings.? The following is from Reuters and points to a US economy in good shape, and therefore a risk-on environment:??Households spent more on both goods and services last month. Goods outlays vaulted 1.3% (while) services spending rose 0.6%, lifted by healthcare, housing and utilities as well as financial services and insurance. March's strong gain put consumer spending on a higher growth path heading into the second quarter. "Consumers appear to have solid momentum coming out of the first quarter," said Daniel Silver, an economist at JPMorgan. "While we don't have much hard data for the second quarter at this point, the end-point for the first quarter suggests that second-quarter spending growth could be strong."

·???????? Risk-on appetite from Friday’s PCE report was bolstered by banner earnings reports from Alphabet (Google) and Microsoft the night before with the tech heavy Nasdaq index surging by 2% on Friday and capping its best week since November 2023.? We have a shortened week to navigate with a Wednesday public holiday breaking things up nicely, but from the market’s perspective the major events are Amazon’s earnings tomorrow, Apple on Thursday, the FED’s latest monetary policy statement on Wednesday night and then the monthly US jobs report on Friday afternoon.? The week will be anything but quiet!!!?

·???????? No local market data today.??

·???????? Possible USD mid-rate trading ranges in the Rand today are R18.70 and R19.00.

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