Yesterday I listed Brexit uncertainty as one of the main threats to the Rand which proved to be spot on as Theresa May called off today’s parliamentary vote, and sent the Rand tumbling.
These are the mid rates as at 8:25 today:
USD = 14.35
AUD = 10.33
GBP = 18.04
NZD = 9.87
EUR = 16.31
Brent Crude = $60.04 per barrel
- We had almost gotten used to the Rand trading below R14.00 to the Dollar with the recent move back above R14.00 looking like a fleeting blip on the radar. But that all changed yesterday as the Rand plunged to R14.46 and giving us a lot to do if we want to recover before the year’s end.
- Yesterday was all about the UK and Theresa May conceding defeat. The UK parliament was due to vote today on the Brexit deal May has struck with the EU but after staunch opposition May decided to cancel the vote with the intention of going back to the EU in search of better terms. This is seen as a backwards step by May coupled with heightened uncertainty around Brexit, the possibility of the UK leaving with no deal or even the chances of a second referendum to call the whole thing off. The Pound dropped to $1.25 to the Dollar and the Rand was caught up in the carnage.
- The following is from Reuters: Adding to the gloom in markets, British Prime Minister Theresa May abruptly postponed a parliamentary vote on her Brexit agreement on Monday, a move that hit risk assets globally and sent the Pound spiralling down to $1.2505. “The end game is nigh for Brexit. We see odds of a no-deal exit in March as low, but expect a bumpy road ahead. A second referendum is not impossible,” Richard Turnill, global chief investment strategist for Blackrock wrote in an outlook report.
- Theresa May now goes back to the UK in search of various concessions but the message out of Brussels has been clear; the deal on the table is the only deal available and the EU will not renegotiate any of the points. EU Chairman Donald Tusk confirmed that EU leaders will meet on Thursday but their primary focus will be to prepare for a no deal Brexit. Various head games are now in play and the Rand can expect a choppy ride leading up to the Brexit deadline next March.
- Locally our attention will turn to mining and manufacturing data sets today which while overshadowed by the Brexit headlines could help strengthen the case for our 2018 GDP print. We get the mining stat at 11:30 and this is forecast to remain in negative territory but improved slightly from -1.8% to -1.5%, and at 1pm we get our manufacturing stat which is forecast to improve from 0.1% to 0.8%. If these numbers surprise to the upside this could help the Rand claw back some of yesterday’s losses.
- Possible USD mid rate trading ranges in the Rand today are R14.20 and R14.50
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