April 08, 2024

Currency News

MyCURRENCY News | Week 15 2024

MyCURRENCY News | Week 15 2024

What we know

Last week was certainly the calm before the storm as we saw an opportunistic rand etch out some gains on the dollar as we produced lower prices all week, and the storm in this case being the US inflation release this week.

Market traded from open at 18.84 to the weekly low around R18.57, hovering at the lows of the week throughout Thursday and Friday. The promising rand ended the week abruptly as employment figures out of the US pushed the dollar higher and we witnessed the rand take back a portion of its gains.

Jerome Powell of the Federal Reserve had another nation address last Wednesday, and as expected, remained very firm in the stance that before any rate cuts come into play, inflation will need to be under control.

The hardest hitting announcement last week was surely the increased jobs added to the payroll in the US; in total 91K jobs were added to the payroll (excluding the farming industry). A lower unemployment rate accompanied this and sent the dollar on a short term run as we lost around 13 cents on the exchange rate on Friday.

Locally, the narrative remains consistent with the usual uncertainty surrounding the elections in May, and as we move into Autumn – and days are getting shorter and shorter – it seems apt to give thanks that we have been with consistent electricity this week and Kusile Power Station is now operating at full capacity.

What others say

ReutersYellen says US will not accept Chinese imports decimating new industries

“U.S. Treasury Secretary Janet Yellen warned China on Monday that Washington will not accept new industries being decimated by Chinese imports as she wrapped up four days of meetings to press her case for Beijing to rein in excess industrial capacity.”

BloombergZimbabwe Replaces Battered Dollar With New Gold-Backed Currency Called ZiG

“Zimbabwe, in its latest bid to end the serial slide of the local dollar, has replaced it with a new unit called the ZiG backed by a basket of foreign currency and gold.”

What we think

Last week we said,“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!”

The soil is fertile for the dollar to continue its bullish trend, although the inflation figures being released on Wednesday may through a spanner in the works. Should inflation not reflect any signs of making its way to a manageable area, then we can be confident that rates should remain unchanged in April.

The Dollar will have a large amount of ground to cover in-order for the R19.00 levels to be re-visited again. Although, with improved employment figures out of the US, this does not seem like an unrealistic area for the market to re-visit.

Our faithful Rand has been trading stronger this morning and when compared to a range of emerging market currencies, it has been significantly outperforming these currencies over the past month, being a top choice for an investor looking to diversify into a riskier market.

The forecast this week is for US inflation to increase from 3.2% YoY to 3.4% YoY. Any release outside of the forecast will likely impact the market.

We can expect that wherever inflation pegs, this will have implications on when markets can anticipate the rate-cut cycle to begin, and with every release – we get more information on the state of inflation and the pending interest rate decision.

Our range for the week is for markets to trade between R18.50 – R18.90.

Have a great week ahead.