Rand Report - 29/10/2024

Good morning

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When it comes to the technology sector Artificial Intelligence is all the rage with billions of Dollars being spent in an ongoing AI arms race.? Investors are hoping to get a glimpse of how wise this drive has been this week as we get quarterly results from Alphabet (Google), Microsoft, Meta (Facebook), Apple and Amazon.

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These are the mid rates at 5:50 today:

USD = R17.72

AUD = R11.64

GBP = R22.98

DXY = 104.35

EUR = R19.17

Brent Crude = $71.55 per barrel

Market News

• Yesterday can best be described as the Rand treading water ahead of the week’s major market moving events, and of course ahead of next Tuesday’s US election.? We opened the week at R17.72 to the Dollar and despite a brief look at R17.62 we spent most of the day trading around the R17.70.
• Fortunately for the Rand the political uncertainty in Japan has not translated into a meaningful shift in pricing across the currency market.? The Yen did suffer a small setback which is probably why we opened yesterday at R17.72, but when it was confirmed that the incumbent coalition only secured 213 seats when 233 are needed for a majority this did not trigger a deeper selloff.? The Bank of Japan holds their next meeting this Thursday so the market will be watching to see if there’s any noticeable shift in tone around normalising policy, but with no rate hike expected regardless of the election result hopefully this meeting will be overlooked by the market.?
• The Dollar Index started the week off slightly on the backfoot which helped the Rand hold its ground at least, but with the greenback on track for a 3.5% gain over October it is still looking at its best monthly performance in over two and a half years.? With no new catalysts to focus on the Dollar is still being propped up by the twin forces of robust US market data implying that the FED can afford to move slowly with rate cuts plus the odds slightly favouring a Trump victory which could prove inflationary for the US.? We now wait for a raft of fresh data releases later this week and of course the election on Tuesday.?
• With only the monthly job vacancies report coming from the US today we could well see another session with limited price movements although hopefully the Rand is able to benefit from a slight easing in Middle East geopolitical tensions.? After a nervous wait we finally had Israel’s retaliation against Iran and while fighter jets were flown deep into Iranian territory the targets struck were all military in nature with oil production and nuclear facilities left untouched.? Oil fell 6% thanks to supply concerns abating and with any luck the Dollar’s safe haven appeal will also take a knock.?
• Locally all eyes are on tomorrow’s medium term budget speech and the following from Reuters suggests that we might be in for a touch of good news:? Finance Minister Enoch Godongwana's budget policy statement to parliament will include an update on the health of public finances midway through the fiscal year. A Reuters poll of economists published last week?predicted?that Godongwana will announce a lower 2024/25 budget deficit estimate than was given in February's main budget, but fiscal challenges are expected to slow consolidation efforts next year. "Although this is not a policy-setting event, any indication of credible fiscal reforms would support market confidence and the Rand," Andre Cilliers, currency strategist at TreasuryONE, said in a note.
• Local market data today sees our private sector credit extensions at 8:00.
• Possible USD mid rate trading ranges in the Rand today are R17.60 and R17.90.

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