08 October 2024
Good morning
We’ve made it to Friday and the biggest week of the year is almost behind us. With just one more major event to navigate currency traders around the world are probably sleepwalking towards the weekend, let’s just hope that the headlines out of China don’t hold any nightmares for the Rand.
These are the mid rates at 5:45 today:
|
USD = R17.35
|
AUD = R11.56 |
|
GBP = R22.54
|
DXY = 104.50 |
|
EUR = R18.73 |
Brent Crude = $75.25 per barrel |
Market News
- Very interesting, and somewhat unexpected price action for the Rand yesterday as we opened at R17.60 to the Dollar and traded progressively stronger to hit R17.27 late on which is our best level for the week and way below Wednesday’s blowout to R17.80. Decent gains against the Pound and the Euro are also worth taking note of.
- As things stand we look set to notch up a weekly gain against the Dollar, this as we opened on Monday at R17.52 and go into today’s final session at R17.35. All things considered this would be a very unexpected turn of events as we were assured that a Trump victory would be associated with Dollar strength, and we saw that with the Dollar Index spiking to 105.40 on Wednesday, but with his win over Harris being so comprehensive one would have thought that the Dollar should have moved even higher but that has not been the case. Some analysts are ascribing the Dollar’s retreat to how swift and uneventful the election process was, and any fears around a contested election along with public unrest have quickly unwound which has seen the Dollar give up ground as a safe haven asset.
- There are two other potential catalysts for the Dollar’s pullback and the first is that while Trump has won the election he will only be inaugurated in January and will then need to follow due process should he want to push through his policies around de-regulation, tax cuts, changing immigration laws and implementing tariffs. Things won’t change overnight and the Dollar is falling back now that the excitement surrounding the election has subsided.
- The final catalyst for Dollar weakness is the FED as they cut US interest rates last night by 25bps as expected, and while being noncommittal, as usual, they definitely left the door open for another cut in December. Chair Jerome Powell said that the FED is “feeling good” about the health of the US economy, and that price pressures have “made progress” in their move back towards the FED’s 2% inflation target, and while there has been much speculation that the FED would have to reconsider their rate cutting path under a Trump administration for now it looks like business as usual. The prospects of lower US rates would have weighed on the Dollar Index.
- With the US election and the FED policy announcement behind us you’d be forgiven for thinking that the week is done but we still have the results of China’s National People’s Congress meeting to get through, and hopefully this holds some good news for the Rand. A Reuters report earlier this week suggested that a stimulus program of up to $1.4trn over five years could be announced today and the Rand typically benefits from any good news around the Chinese economy so let’s see if that report was accurate. These headlines should come out some time this morning allowing the Rand to glide into the weekend with no further risk events to worry about.
- No local market data today.
- Possible USD mid rate trading ranges in the Rand today are R17.25 and R17.55.
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