July 22, 2024
MyCURRENCY News | Week 30 2024
What we know
Having started yet another week below the 18.00 round figure, the ZAR again lost ground during the week and seems unable to maintain a bullish rally. The ZAR.USD closed at 18.27 on Friday, with the Rand losing ground for most of the week.
Despite a slightly weaker ZAR last week, there was not much to drive trading internationally, which resulted in a tight trading range. A slight strengthening of the Dollar index indicates that the move resulted from Dollar strength rather than Rand weakness.
Overall, it was a relatively quiet week in terms of global economic news with no material movements following flat retail sales figures from the US. The ECB decided to keep rates unchanged in line with expectations after a recent rate cut. MoM retail sales in the UK decreased by 4.1 percentage points, which seems to have had negligible effects on Pound trading.
South Africa’s MPC decided that the repo rate should remain unchanged at 8.25% and that the restrictive monetary policy is the way to go to bring inflation back into the 3-6% target range.
The biggest news of the week arrived yesterday evening with Joe Biden finally pulling out of the running for the presidential elections. From the moment of last month’s debate, our view has been that there was simply no way that the Democrats could allow him to be their nominee and there has been nothing to change our opinion since. If anything, each new appearance by Biden, rather than assisting in damage limitation, has served to underline the need for a new candidate, with the pressure applied by senior Democrat leaders finally becoming too much to bear. Unfortunately for the Dems, early headlines put Kamal Harris favourite to take Biden’s place on the ballot. In our opinion, Harris will fair no better against Trump than her predecessor, allowing for the Republicans to romp to victory come November.
Together with the likelihood of Fed rate cutes in the coming months, Trump’s desire for a weaker USD may very well signal tough times ahead for the green-back.
What others say
Business Standard – US elections: Can Trump-Vance administration herald new era for dollar?
“Donald Trump’s selection of Ohio Senator J D Vance to be his vice-presidential nominee pairs him with a kindred spirit on trade, taxes and a tough stance on China. But it is their shared affinity for a weak dollar that could have the most sweeping implications for the US and the global economy.”
CNN – Harris will seek Democratic nomination and could be the first Black woman and Asian American to lead a major party ticket
“Vice President Kamala Harris said she plans to seek the Democratic nomination after President Joe Biden stepped aside and endorsed her, setting up a push that could make her the first Black woman and first Asian American to lead the ticket of a major political party.”
Visual Capitalist – Which countries have the most Olympic medals of all-time?
“This summer, 10,500 athletes will compete at the peak of their careers in the Paris Olympics. This graphic shows the countries with the highest Olympic medal count of all-time, based on data from the International Olympic Committee.”
Daily Maverick – Better global agricultural conditions continue on comforting food price path
“South Africa’s agriculture is part of the global agricultural market. Therefore, we must consistently pay attention to the production conditions of agricultural commodities globally as they affect our domestic prices and consumers.”
What we think
Last week we said that…“The Rand will start taking more of its direction from the Dollar as markets look tentatively towards the FED’s interest decision, and macro-market drivers that impact this.”
The next interest rate decision from the FED comes at the end of July with markets not expecting a cut but pricing in a very high probability of the first cut to take place following the September meeting.
Locally, the MPC has also hinted at the likelihood of rates beginning to decline from September should inflation cool to a manageable level and the restrictive policy can begin to ease.
This week we will look to see how the Dollar reacts to relatively higher forecasts for Quarterly GDP and Inflation in the US. A weaker than expected figure may allow for some Rand strength later in the week.
Our range for the week is: R 18.00-18.40.
Have a great week ahead.