Rand Report 29/05/2023
Good morning?
We have a deal!!!!?Sort of….??A two year extension of the US debt ceiling has been agreed in principle between Joe Biden and Kevin McCarthy but it still needs to be passed through the House of Representatives, and then the Senate, before being signed into law.??
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These are the mid rates at 7:20 today:
USD = R19.67
AUD = R12.88
GBP = R24.31
DXY = 104.12
EUR = R21.13
Brent Crude = $77.65 per barrel
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Market News:
·????????It’s Monday morning and as we all trundle off to another day in the office the Rand could well be enjoying a late lie in with both the US and UK markets closed today.?Friday was actually a good day for the Rand as we managed to hit R19.54, and hopefully we get more of the same when the full currency market opens tomorrow.??
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·????????Thursday last week was a shocker for the Rand as we plunged to new record lows across all fronts.?R19.82 to the Dollar was a big shock after the Reserve Bank hiked our interest rate by 50bps, but it was the gloomy outlook given by SARB governor Lesetja Kganyago which did the damage.?After such a violent move out it could be expected that the Rand would retrace some of its steps, and that’s exactly what we saw on Friday as we made it back to R19.54 before closing the week at R19.65.
·????????The following is from a Sharenet article published on Friday afternoon:??The South African Rand made a strong recovery on Friday from a record low struck overnight after a central bank interest rate hike failed to impress some traders and economists. "(Yesterday's) move may have been overdone," Greg Davies, head of wealth at asset manager Cratos Capital, told Reuters. "It seems the market is settling down away from the panicked move we had yesterday to more realistic levels." Another factor cited behind the Rand's surprise slump on Thursday was comments in the monetary policy statement that the SARB expected further currency weakness ahead.
·????????With the US and UK markets closed for public holidays we should see muted movements in the currency market today.?The weekend’s major news is that politicians in the US have agreed an extension to the US debt ceiling which, while not written into law just yet, should take an element of risk-off sentiment out of the market given that Treasury Secretary Janet Yellen has shifted her projected X-Date, when they run out of cash, from 1 June to 5 June.?Just what this means for the Dollar is unclear as less risk should hurt the Dollar as a safe haven, but with the US no longer on the brink of catastrophe that could be Dollar positive with investors flocking back.?We’ll have to wait for tomorrow to see the full effect of this development.??
·????????Market data out of the US on Friday supported the Dollar with their consumer spending picking up more than expected while the FED’s preferred measure of inflation, the PCE index, remained elevated.?Bets that the FED is not done with tightening continue to increase with the chances of a 25bps hike in June now sitting at 68%, while prospects of a rate cut later this year are dwindling fast.?We still have the monthly jobs report this Friday and then CPI on the 13th?before we get to the next FED meeting, but for now it looks like the gains against the Dollar will be difficult to come by.??
·????????No local market data today.
·????????Possible USD mid-rate trading ranges in the Rand today are R19.50 and R19.80.?
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