Forex Market Report

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Good morning

It was supposed to be a relatively quiet start to the week, this as the US market was closed for their President’s Day public holiday. But unfortunately the Rand wasn’t given the day off as we were broadsided by a Moody’s report.

These are the mid rates as at 7:40 today:

USD = 15.02
AUD = 10.05
GBP = 19.52
NZD = 9.64
EUR = 16.27
Brent Crude = $57.39 per barrel

Market News

  • The Rand opened the week at R14.85 to the Dollar and after drifting sideways for an hour or two we plunged to R15.02 in double quick time which is our weakest level since the 10th of Feb.
  • SONA, the 2020 Budget Speech and the coronavirus have taken centre stage of late with the Rand bouncing around as headlines hit the wires. But yesterday saw a new player enter the fray with Moody’s releasing a global GDP report which included an assessment on South Africa. At a global level they downgraded the group of G-20 countries to a 2020 output of 2.4% which is lower than 2019, this thanks to impacts of the coronavirus, but for SA they cut our forecast from 1% to 0.7% citing local factors curbing growth. The market took this as an indication of their thinking ahead of the all important credit assessment in late March and the Rand took a direct hit.
  • The following is from Bloomberg: South Africa’s Rand weakened after Moody’s Investors Service lowered its forecasts for economic growth, raising the risk that the country may lose its last investment-level credit rating. Moody’s, which is scheduled to review South Africa’s Baa3 credit rating in March, said the country’s lacklustre economic performance was due to domestic challenges rather than external factors such as the coronavirus. “Slow growth of economic activity is hampering the rate of jobs creation,” Moody’s said. “Our sub-1% projections reflect our view that the pace of economic activity will remain subdued, well below the country’s potential, over our forecast horizon.”
  • Coronavirus fears have kept the Rand under pressure while the world waits for signs of its spread plateauing. Last week China stunned the market with a changed diagnosis procedure, with the change resulting in over 14 000 new cases in a single day. But yesterday’s new case count has dropped to 1 886 with 98 additional deaths, figures that could indicate a slowing in the infection rate and hopefully some reprieve for the Rand.
  • Yesterday’s Moody’s report unfortunately ended our steady gains against the Euro, this as the common currency continues to fall against other major currencies. The Euro has sunk to $1.08 to the Dollar, a level last seen in April 2017, and the following excerpt from Reuters suggests that the slide isn’t over yet: “The Euro is close to testing an important support level at $1.08 due to the diverging economic outlook between the Euro Zone and the United States,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities. “It looks a little oversold, so in the very short-term there could be a bounce, but the Euro’s fundamentals still point more to the downside.”
  • No local market data today.
  • Possible USD mid rate trading ranges in the Rand today are R14.85 and R15.15

 

 

 

 

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