July 01, 2024

Currency News

MyCURRENCY News | Week 27 2024

MyCURRENCY News | Week 27 2024

What we know

The market was whipsawed last week by South African politics and, well, more South African politics. The Rand traded between a low of R17.95 and a high of R18.52, eventually closing at R18.18 to the Dollar, reflecting a 3.15% weekly range and briefly returning to the mid-R18s.

As our newly formed Government of National Unity grappled with cabinet seat agreements, the market remained highly sensitive and at the whim of any local political developments. Disagreement over the revised cabinet seats weakened the Rand on Thursday, while optimism about a forthcoming agreement strengthened it on Friday.

As far as news announcements go, our PPI figures were released locally, and that was printed at 4.6% YoY (Year-on-Year) and 0.1% MoM (Month-on-Month), less than the forecasted figures of 5.0% YoY and 0.2% MoM. This suggests inflation might finally be tiptoeing towards a more manageable level.

Furthermore, it was a relatively quiet week for the Dollar, as measured by the Dollar Index, which opened and closed around 105.85, coinciding with relatively flat news announcements out of the States as US GDP and unemployment claims came in as expected, with no over or underperformance.

What others say

Daily MaverickRamaphosa announces Cabinet with ministers from ANC, DA, IFP, PA, PAC and FF+

“President Cyril Ramaphosa has been unable to reduce his executive, but has instead increased the number of positions to accommodate members of the GNU.”

CNBCIMF says Fed should hold interest rates where they are until ‘at least’ end of year

“The U.S. is the only G20 economy to see growth above pre-pandemic levels, and “robust” growth indicates ongoing upside risks to inflation.”

Al JazeeraSix takeaways from the Biden-Trump presidential debate

“Who won the debate? From Trump’s overstatements to Biden’s faltering speech, here are the highlights.”

What we think

Last week we said that…“As these events continue to unfold, and as feathers get ruffled, the Rand may see a little bit of volatility and potentially an unwinding of some of its recent gains.”

Following on this sentiment, we indeed saw the Rand unwind some of its recent gains last week but despite this, the market absorbed the news of an imminent agreement on cabinet seats quite well.

The market opened significantly lower than it closed last week, closing at 18.18 and opening this week at 17.99, which is a result of an agreement reached on cabinet seats coming swiftly into play on Sunday evening combined with a weaker dollar.

We have a big week in the US with FOMC on Wednesday and the non-farm payroll announcement on Friday, both of which could either rock the Dollar or set it up for smooth sailing throughout the rest of July.

Our range for the week: 17.80 – 18.35.

Have a great week ahead.