April 29, 2024
MyCURRENCY News | Week 18 2024
What we know
Last week the Rand opened at R19.06 to the Dollar and traded in a narrow range between R19.00 and R19.20 for most of the week before strengthening significantly towards the end of the week to close at R18.76. Thursday showed the first signs of some rand strength with the real Bull run on Friday afternoon.
The rand soared on Friday gaining around 30 cents in the latter part of the trading day following an opinion poll that indicated a favourable coalition may be on the cards for the upcoming election. The poll showed a decline in support for the EFF with a coalition between the DA and ANC having a gentler effect on the market. This was erred on by strong PPI figures for March increasing 1.1% month-on-month and slightly higher year on year at 4.6%.
It is likely to be a busy week in the US as Fed chair Jerome Powell will be closely watched following the FOMC meeting on Tuesday. Although we are not expecting a rate-cut following this meeting, there may be vital clues on when the first decrease can be expected. We will end the week with the US employment report (US Non-Farm Payroll) which will provide insight into the state of the economy in the US.
What others say
BBC – South Africa Freedom Day: Did the ‘get-out-of-jail’ vote live up to the hype?
“With elections fast approaching in South Africa, the BBC’s Nomsa Maseko reflects on 30 momentous years of democracy and how the country has changed since the end of the racist system of apartheid.”
Daily Maverick – It’s time to rethink the chimera of the ‘Global South’
“It is a deeply problematic paradigm entrenching victimhood rather than agency. Far more useful would be the notion of the Free South.”
BusinessTech – SARS double-tax warning for South African expats
“The South African Revenue Service’s (SARS) inefficiencies are leaving expats in limbo, contending with double taxation unnecessarily.”
CNBC – Japanese yen strengthens sharply after hitting 160 against dollar for the first time since 1990
“The yen briefly touched 160.03 against the dollar, the weakest level since April 1990 when it touched 160.15.”
What we think
Last week we said,“Besides some vital manufacturing figures coming out of the US, UK, and EU, we can expect markets to trade relatively consistently this week, barring another outlier that leaves us on rocky terrain.”
The “outlier” in this case was positive news for South Africa rather than negative causing Rand strength rather than weakness across the board and placing some downward pressure on the Rand-Dollar and other major ZAR pairs. This flutter of strength is welcomed but there is still some way to go back down to the best levels seen at the start of April. We are still trading comfortably within the Dollar-ZAR range for the year, but it is good to see that we have again dipped below the round 19.00 level.
In the US, inflation is still the biggest threat but with March figures coming in close to expectations a rate cut is still on the cards later in the year although the Fed will be in no rush to begin rates cuts prematurely. Expectations have shifted after the last inflation report from three cuts in 2024, down to possibly only one in September with a small likelihood of another before the end of the year. Higher rates for longer are positive for the Dollar and will likely bring some Dollar strength following the announcement.
Expectations are that fewer jobs were added to the US payroll in March which is generally a bearish signal; however, the non-farm payroll releases have been notoriously hard to call of late, with the market frequently being caught on the wrong side of the USD reaction. We’ll be right eventually, so let’s flip a coin and hope that we finally get a weaker than expected NFP number this Friday – that really would allow for a bit of positive ZAR.USD impetus.
Our range for the week: 18.60 – 19.00
Have a great week ahead.