Rand report: Vaccines, stimulus and travel bans

Initially buoyed by news of various approved vaccines set to be rolled out across the UK, US and Europe, market optimism continued to rise following positive news from the US, where the Senate has approved a $900 billion stimulus package. 

Unfortunately, this did not last too long as fears of a mutated strain of Covid-19 overtook the positive sentiment. The strain seems to be centred in the UK and is deemed to be much more contagious. This has prompted many countries to impose new travel restrictions on the UK, leaving hundreds of trucks stuck along the French border, further exacerbating fears of food supply in the UK over the festive period.

e9b9fe92 rand graph 22 12 2020 - Rand report: Vaccines, stimulus and travel bans
Image credit: Sable

On the local front we have seen a major uptick in Covid-19 cases throughout South Africa, with additional restrictions being placed on many provinces and regions. Although this would usually be a negative risk factor to the ZAR, it seems the market is taking it in stride with the currency strengthening from the low 20s to a peak of R19.43 yesterday. Against the greenback we have seen similar activity, with a move from R15.05 last week to a peak of R14.50 on Friday. Overall, it seems the ZAR is not in too bad a position, although risk factors remain persistent.

This week, as well as next, we will see limited trading days and much thinner liquidity as most of the major players reduce their positions in the market during the end-of-year break. We don’t have much on the data calendar, thus we expect most of the movements in the currencies to be influenced by news headlines and developments related to the pandemic in various countries.

Market event calendar

Tuesday 22 December

  • UK: GDP Data
  • US: GDP Data

Wednesday 23 December

  • AUD: Trade balance data
  • US: Durable Goods

Thursday 24 December

  • Limited trading day

Friday 25 December

  • Non-trading day

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