Forex Market Report

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Good morning

Two steps forward and one step back, this as local and international developments both boosted the Rand as well as capped our gains. But at least we have managed to hold position on or below the R14.00 handle for 8 days in a row now!!

These are the mid rates as at 7:20 today:

USD = 13.98
AUD = 10.04
GBP = 18.25
NZD = 9.40
EUR = 15.80
Brent Crude = $71.97 per barrel

Market News

  • The Rand has been stuck in a very tight trading range of late and yesterday was no different. We opened at R14.01 to the Dollar and strengthened to R13.93 before slowly drifting back to close at R13.98 where we open this morning.
  • Rand strength yesterday came from a combination of international and local data sets with China setting the tone early on. Fears of a global economic slowdown saw recent forecasts for Chinese GDP growth being cut, so when they announced not only an annualised Q1 2019 print of 6.4% but also a big jump in industrial production, retail sales and fixed asset investment that breathed a sigh of relief into the market which lifted the Rand. The Chinese data also helped boost the Euro which is typically Rand supportive.
  • The following is from MoneyWeb: Emerging market currencies firmed after China’s economic growth for the first quarter rose unexpectedly. China’s economy grew at a steady 6.4% pace in the first quarter defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement. Currencies of emerging markets also gained against a weaker Dollar. Commodity giant South Africa‘s Rand firmed half a percent.
  • Local market data would also have helped the Rand as our consumer inflation rate came in marginally lower than expected at 4.5% while February’s retail sales comfortably beat expectations at 1.1% growth (forecasts called for 0.6%). Retail sales was down from January’s 1.2% growth but any market data that surprises forecasts to the upside will boost the Rand.
  • Unfortunately it wasn’t all plain sailing yesterday as the Reserve Bank released their monetary policy report which pulled no punches when it comes to state capture, load shedding and the impacts on our GDP growth. The report asserted that largescale corruption and maladministration as a result of state capture has led to load shedding as the symptom, and that South Africa has less power generating capacity today than we did 10 years ago. It went on to state that should load shedding persist 1.1% of our GDP growth would be wiped out, and given that the bank has forecast only 1.3% growth in 2019 that leaves a pretty gloomy picture. This would have been a drag on the Rand.
  • No local market data today.
  • Possible USD mid rate trading ranges in the Rand today are R13.80 and R14.10

 

 

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