January 13, 2025
MyCURRENCY News | Week 2 2025
What we know
As the year kicked into gear, the Rand struggled to find similar momentum. After creeping toward the 19.00 mark the previous week, US employment figures released last Friday provided the Dollar with the final push to breach this level, closing the week at 19.08.
The Rand had started the week on a positive note, gaining 20 cents against the Dollar. However, as robust economic data emerged from the US, the Rand began a steady decline over the course of the week.
Dollar strength was spurred on by the FOMC minutes released on Wednesday, which confirmed the Fed would be cutting rates more gradually this year than initially expected. The Non-Farm payroll figures were the final nail in the coffin driving the USD.ZAR to a weekly high of 19.20 before it settled at 19.08 by week’s end.
Most of last week’s significant news came from the US, however, the Eurozone YoY inflation rate came in at 2.4%, which is 20 basis points higher than the previous figure.
Concern around UK borrowing costs has also affected the Pound, specifically against the Dollar, reaching a one-year low on Friday.
What others say
Daily Maverick – Donald Trump’s second presidency starting shortly presents a major challenge to SA
“Can Pretoria persuade a free-trade-phobic president to keep South Africa’s preferential access to the US market?”
Moneyweb – US inflation is set to back Fed pause after robust jobs data
“The consumer price index excluding food and energy is seen rising 0.2% in December after four straight months of 0.3% increases”
CNBC – Spike in UK borrowing costs raises specter of public spending cuts
“The march higher in U.K. government bond yields since the Labour government presented its debut budget plan in October has sparked concern, as borrowing costs rose to breached numerous decade highs.”
What we think
Last week we said, “this week ends with the high impact Non-Farm payroll announcement on Friday, providing the first look at US employment figures going into this year and its close connection to consumer spending; it is forecast that fewer jobs were added to the payroll in December compared to November.”
Last week was a reminder that economic forecasts are unpredictable and can be proven wrong. The final figure of 256,000 jobs added to the payroll was just over 1.5 times the forecasted figure showing strong growth in the economy, even over the festive season.
This week we look forward to Inflation data from the US, which could easily urge the Dollar higher. With fewer projected cuts this year, even a slight uptick in inflation may not be enough to slow the Dollar.
We also look forward to inflation releases from the UK on Wednesday followed by UK GDP data on Thursday, which can provide further insight into how the increased borrowing costs are affecting economic growth in the UK.
Our range for the week is 19.10 – 19.40.
Have a great week ahead.