April 15, 2024
MyCURRENCY News | Week 16 2024
What we know
Last week, the market opened at R18.65 and strengthened to 18.40 before Wednesday’s inflation figure led to a more bullish Dollar, continuing until the end of the week with a close of 18.85.
On Wednesday, following inflation data from the US, we saw a mini bull run from the dollar taking back 35 cents on Wednesday following two weeks of steady gains from the Rand. Around the R18.50 round figure there was some significant buying pressure that re-entered the market.
With inflation consistently remaining higher than expected at 3.5%, the Fed’s projected three interest rate cuts are looking less likely and all eyes will be on the next Fed meeting at the end of April. If inflation does not start to cool, this projection will almost certainly need to be revised downward.
Those looking to buy Dollars with their Yen took a bit of a hit as the hotter than expected US inflation figure for March also sparked a move over ¥153 against the dollar for the first time since the mid-1990s. This barrier has been seen by many currency analysts as a trigger where the Japanese Monetary authorities might intervene to prevent speculation on a “overly weakened Yen”.
Locally, the Rand battled this past week due to pre-election jitters and the possibility of Zuma once again having a seat in parliament, combined with Dollar strength. The volatility resulted in a wider than expected trading range that may hold until elections have taken place.
What others say
Reuters – Forex Dollar steady, Yen at 34-year Low as US rate-cut Bets Recede
“The yen’s slide against the dollar has revived anticipation of currency intervention. Japanese Finance Minister Shunichi Suzuki said he was watching currency moves closely, and that Tokyo is “fully prepared” to act.”
The New York Times – Jacob Zuma, South Africa’s Scandal-Ridden Ex-President, Is Running Again
“Jacob Zuma, who resigned as South Africa’s president in shame in 2018, is now staging his biggest comeback act yet by running in next month’s parliamentary elections.”
Visual Capitalist – A Map of Global Happiness by Country in 2024
“Assessing national happiness levels offers insight into collective well-being. The World Happiness Report 2024 delves into this, drawing from Gallup data to quantify and compare happiness worldwide.”
What we think
Last week we said,“The soil is fertile for the dollar to continue its bullish trend, although the inflation figures being released on Wednesday may throw 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.”
We did indeed see a ‘spanner’ with Last Wednesday’s inflation figure. With this we are leaning towards the Fed maintaining rates rather that beginning their rate cutting cycle when we next hear from Jerome Powell on Tuesday.
Higher rates for longer will add to Dollar strength in the near future and it will be interesting to see if there is enough positive sentiment around the Rand to claw back some of the gains seen in the last two weeks.
Expectations around South Africa’s inflation rate, which will come out on Wednesday, indicate that we are yet to drop below 5.0% although a decrease from February is likely. Despite the predicted decrease in inflation, the SARB is likely to be underwhelmed by the March figure. Regardless of the final figure, the announcement is likely to bring some of that well-known volatility we are used to seeing in the Rand.
Our range for the week is for markets to trade between R18.70 to R19.15.
Have a great week ahead.