That’s it, July 2024 is done and dusted with just one last trading session for the Rand to get through before we move into August (and take another step closer to summer and its sorely missed warmer/lighter mornings!!!).? One last session to get through, but what a session it is.?
These are the mid rates at 6:20 today:
Brent Crude = $79.47 per barrel
- July has had its ups and downs and as things stand it looks like we will close a little stronger than the R18.38 to the Dollar where we opened on the 1st.? We go into today at R18.30 which is significantly better than the month’s worst level of R18.64, but unfortunately some distance off the month’s best level of R17.94.?
- It’s FED day, and while there are various headlines from around the world all vying for the market’s attention it will be difficult to unseat the trajectory of US monetary policy as today’s main event.? The Bank of Japan’s policy statement is arguably the second most important event today, and with this update due in the very near future we have seen the Yen post further gains against the Dollar with a late flurry of speculation that the bank is considering lifting interest rates by 0.25% as opposed to the conventional thinking of just 0.10%.? The Yen’s impressive move is keeping the Dollar Index under pressure and in so doing helping the Rand to improve from R18.45 yesterday morning to R18.28 now, hopefully the BoJ does not disappoint and unwind this good work.
- It’s interesting to see the Dollar Index sliding at a time when geopolitical risks are ramping up, a scenario that would typically see the Dollar strengthen as a safe haven asset.? As expected Israel has struck back at Hezbollah with the bombing of a building in Beirut that has killed one of their top commanders, and in breaking news Iran has confirmed that a top Hamas official has just been killed on Iranian soil.? Add all of this to escalating tensions in Venezuela after their elections are being claimed by both parties, which is resulting in violence across the country, and it’s safe to assume that the Dollar should be stronger, but fortunately for the Rand it is not.? ??
- The above headlines will continue to flow throughout the day, and they will be joined by US market data releases at 2:30pm, but today is all about the FED’s policy statement at 8pm and Chair Jerome Powell’s press conference at 8:30pm.? The market is pricing in close to a 100% chance of a September rate cut so it’s difficult to see what the FED can say that will improve this situation, but perhaps the market will also be looking for clues as to what the FED’s next move will be after September.? Will they cut once and then wait to see what happens, or are we at the beginning of consecutive cuts over the FED’s three remaining policy meetings this year?? Language around this is probably what will drive price action in the currency market.?
- The following is from CNBC and talks to how tricky it will be for the FED to signal a cut in September but then keep plans for the rest of the year close to its chest:? Bill English, the FED’s former director of monetary affairs and now a Yale professor expects the FED to hint at a September move but stop short of providing a detailed road map of what’s to follow. “Given where inflation is, given where the economy is, it’s appropriate to ease but not to be seen as committing to a whole chain of easing,” English said. “It’s difficult to communicate clearly about where monetary policy is going.”
- Local market data today sees our trade balance at 2pm.
- Possible USD mid rate trading ranges in the Rand today are R18.15 and R18.45
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