Rand rebounds after volatile start 

This Rand report is brought to you by Sable International

Positive sentiment on Sino-US trade talks caused the US Dollar to rebound, while the Pound remained volatile as uncertainty surrounding Brexit continues.

South Africa appeared to be in danger of a downgrade if the government proved unable to adequately address fiscal concerns. As result of this, the Rand experienced some volatility during last Tuesday’s morning trade.

The Rand opened
at around R18.29 to the Pound and at around R14.17 to the US Dollar. It
continued to lose ground against the Pound closing at R18.40 for the day. This
was caused by uncertainty surrounding the Budget Speech and fears of a
potential downgrade. Volatility was expected to continue on Wednesday.

The Rand strengthened against the US Dollar on Tuesday, closing at R14.12. The US Fed’s dovish stance weakened the Dollar against most major currencies, including the Rand.

183c7045 rand report grapg 26 02 2019 - Rand rebounds after volatile start 

On Wednesday morning, the Rand’s volatility continued (as expected) due to uncertainty ahead of the Budget Speech. The Rand traded flat for most of the morning against the US Dollar and the Pound.

It later traded at R18.72 against the Pound and R14.34 against the Dollar at the start of the Budget Speech. The Rand stabilised and continued to gain ground against major currencies until Thursday morning amid lower than expected CPI data. It remained flat for the remainder of the week.

Market event

Tuesday 26 February

  • German Consumer ConfidenceConsumer sentiment on the German economy (one of the leading EU
    economies) has a significant influence on spending and demand for consumer
    goods in the rest of the EU.
  • US Fed Chair Powel Testimony – The US
    Fed Chair is expected to clarify US monetary policy agenda.

27 February

  • EU Business Confidence – Consumer
    sentiment on the EU economy is a useful indicator of future. spending.
  • Canadian Inflation Rate – Higher inflation
    increases the money supply and usually devalues the local currency.

Thursday 28 February

  • China manufacturing PMI – China’s
    manufacturing data will be a useful indicator of demand as well as the impact
    of the Sino-US trade war.
  • SA money supply – The money supply will
    allow one to gauge the underlying value (demand side) of the ZAR.

Friday 1 March

  • US manufacturing Data –   This data will indicate the strength of the country’s economy as this will highlight the demand for goods.  
  • SA manufacturing Data – This data will indicate the strength of the country’s economy as this will highlight the demand for goods

-Justin Fortuin

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