April 03, 2024
MyCURRENCY News | Week 14 2024
What we know
Last week’s currency market resembled a snooze button, with investors opting to play it safe before the holiday break. When holidays approach, we generally find investors often cosy up to more dependable currencies or assets. Who can blame them? When any potential uncertainty knocks, they prefer not to entertain the Rand’s company.
SARB maintained its repo rate at 8.25% for the fifth-round last week. No surprises there, with inflation concerns still doing their jitterbug above the midpoint of the target range. All eyes are now on The Fed, waiting for their next move. Speaking of The Fed, Mr Powell served up some cautious optimism on Friday evening, suggesting they’ll tread carefully in their decision-making. With the economy growing steadily, they are in no rush to rock the boat.
“We can, and we will be, careful about this decision — because we can be,” Mr. Powell said, speaking in a question-and-answer session with the “Marketplace” host Kai Ryssdal in San Francisco. “The economy is strong: We see very strong growth.”
Meanwhile, the ZAR.USD pair is offering importers and clients looking to invest offshore a brighter start to another short week, thanks to some post-holiday market movement, we are currently trading quite comfortably below the R19.00 level. Should that support line crumble, we might find ourselves circling the R18.75 mark, just as we foresaw last week!
What others say
Moneyweb – Another ‘hold’: repo rate remains at 8.25%
“This is the fifth consecutive ‘hold’ repo rate decision by the central bank, which keeps SA’s benchmark rate at a 15-year high.It comes as inflation hit a four-month high last month, surprising the market somewhat and pushing expectations for a rate cut into the second half of 2024.”
The New York Times – Fed chair says central bank need not “hurry” to cut rates
“While investors were initially hopeful that rate cuts would come early in the year and be substantial, Fed officials have recently struck a cautious tone, maintaining that they want greater confidence that inflation was under control.”
FXStreet – EUR/USD finds floor after Eurozone Manufacturing PMI data
“While investors were initially hopeful that rate cuts would come early in the year and be substantial, Fed officials have recently struck a cautious tone, maintaining that they want greater confidence that inflation was under control.”
What we think
Last week we wrote that “We anticipate a fairly quiet week ahead with many off for local school holidays and the upcoming Easter weekend…unless there is a major surprise in this data, we fully expect more range-bound trade throughout the week.”
Apart from a brief pre-holiday spike to 19.10 on Thursday, trading was as predictable as expected with the bulk of the week spent between 18.85 – 19.00.
While it might seem as clear as day, it bears repeating: the anticipation for potential rate cuts has everyone on the edge of their seats, with markets fixated on any data that could sway the decision towards a reduction.
The ECB continues to have its sights set on June for their first-rate cut and CPI data. Positive shifts in core inflation this week within the Eurozone could increase the likelihood of a rate cut from the ECB. Additionally, we’re awaiting the unveiling of US employment figures, a pivotal indicator for The Fed. Any signs of weakness in this job report could prompt a shift in The Fed’s stance towards a cut.
As the ZAR.USD pair comfortably trades below the R19.00 mark for now, there’s considerable leeway for potential movement. With the right market catalyst, we might just find ourselves gliding towards the elusive R18.60 levels.
For the week ahead, our sights are set on a range spanning from R18.60 to R19.00.
Have a great week ahead.