Rand Report 29/08/2024

Good morning

We might be just a few days away from September, and with it the welcomed promise of spring’s arrival, but with Table Mountain covered in snow and a freezing cold front sweeping across the country winter certainly is not done with us yet.? ?

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These are the mid rates at 5:45 today:?

USD = R17.83

AUD = R12.10

GBP = R23.53

DXY = 100.96

EUR = R19.84

Brent Crude = $78.75 per barrel

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Market News:

·???????? After spending some time out in the cold the Dollar Index finally warmed up yesterday which unfortunately was bad news for the Rand.? We opened the day at R17.74 to the Dollar and traded progressively weaker to hit R17.85 just after our local session closed at 5pm, losses that have pretty much stuck overnight.? ?

·???????? With the Dollar having its worst month in a long time there was always going to come a time when it bounced off its lows, and yesterday looks to have been that day.? We have a revision of the US Q2 2024 GDP today followed by their latest PCE inflation report tomorrow but the week until now has been rather bereft of market data which has left the currency market to trade on last week’s events, events that were Dollar negative.? FED Chair Jerome Powell’s strong indication last Friday that interest rate cuts are coming kept the Dollar pinned at multi-month lows, but with that making it difficult to inflict any further pain on the greenback it was just a matter of time before the Dollar would claw back some of its losses.??

·???????? The following from CNBC points to the Dollar eking out gains yesterday as a natural reaction after its poor run over recent weeks:??The US Dollar rebounded on Wednesday due to month-end buying after recent declines that pushed it to its weakest in more than a year, as traders awaited economic data that could determine the pace of the FED’s imminent easing cycle. “The Dollar’s rise today is warranted given the move lower this month. We have seen a sharp depreciation in the Dollar, being down 5% in the second half of 2024,” said Boris Kovacevic, global macro strategist at Convera in Vienna, Austria. “Looking at the flows, I would attribute its bid today to the usual month-end flows, especially given the fall in the Dollar this month.”

·???????? Powell effectively gave the green light for cutting rates in September but his fellow FED member, Raphael Bostic, was a little more circumspect yesterday which could also have given the Dollar a little boost.? The following is from Reuters:??FED Bank of Atlanta President Raphael Bostic on Wednesday said that with inflation down farther and the unemployment rate up more than he anticipated, it may be "time to move" on rate cuts, but he wants to be sure before pulling that trigger.?"I don't want us to be in a situation where we cut, and then we have to raise rates again: that would be a very bad outcome" because it would undermine people's confidence in the FED. "If I'm going to err on one side, it's going to be waiting longer just to make sure that we don't have that up and down."

·???????? Not helping us was a report by Swiss investment bank UBS where they cut their 2024 growth forecast for China from 4.9% to 4.6%, and worse still, they also lowered their 2025 forecast down to 4.0% while saying that China’s economic woes will deepen before they start to improve.? The Rand is always sensitive to news around China’s economic health and this assessment would not have benefited us as a commodity linked currency.??

·???????? Local market data today sees our July producer inflation report at 11:30.

·???????? Possible USD mid-rate trading ranges in the Rand today are R17.75 and R17.95.

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