August 18, 2025
MyCURRENCY News | Week 33 2025
What we know
Last week we described how support levels play a role in foreign exchange markets, and how they guide short-term forecasts of currency movements. This became increasingly important during last week’s trading as the Dollar hit a low of 17.50 for the third time in seven weeks, without finding a way to break through and remain below this support level.
The driver of this move lay in the US inflation figures and how the release affected the expectations of market participants. The YoY inflation figure printed softer than forecast, while the YoY Core Inflation figure exceeded expectations. There were no surprises in the MoM figures, which came in exactly as forecast. This mix of inflation data appeared to have had a muted impact on the probability that market participants placed on a rate cut at the Fed’s September meeting, with the expectation of a cut on 17 September currently standing at 85%. Declining interest rates make the USD a less attractive investment case and tend to result in a weakening of the currency.
Despite this, the Rand found resistance once again, briefly trading below 17.50 on Wednesday and Thursday, before closing out the week 15 cents above the low. However, the Rand was still able to gain against the Dollar last week despite higher unemployment figures and weak manufacturing numbers locally.
Other major releases last week included UK GDP data, which surprised on the upside compared to the forecast, while unemployment remained steady at 4.7%.
What others say
Reuters – Powell has used Jackson Hole to battle inflation and buoy jobs; he’s now caught between both
“In his valedictory speech to the conference before his term ends next May, Powell on Friday faces a choice between the two approaches at a time when incoming information has confounded his data-dependent strategy by pulling in both directions.“
Business Tech – Harsh reality check for South Africa
“South Africa will never be able to overcome one of its most crushing crises—unemployment—as long as economic growth continues to stagnate.“
The Guardian – Trump piles pressure on Zelenskyy before European leaders arrive in Washington
“US president tells Ukraine leader to give up Nato and Crimea ambitions in run-up to White House talks.“
What we think
Last week we said, “At the centre of this week’s currency movements are the US inflation figures, which will be released on Tuesday. These are forecast to show a slight uptick of 0.1% compared to last month. The real question, however, is how this will affect US interest rates.”
The fact that mixed inflation results had little impact on the probability of declining rates reinforces the view that interest rate cuts can be expected in September. As this environment brings currency weakness, it could provide the window that the Rand needs to settle below 17.50.
A determining factor will be comments from Fed Chair Powell on Friday this week, delivered during the Jackson Hole symposium. We also look forward to extensive economic insights following the FOMC meeting on Wednesday, as the market will look for greater certainty beyond what has been indicated through recent economic data.
We expect domestic and UK inflation releases, with the forecast for UK inflation showing a slight uptick while remaining relatively under control.
Our range for the week: 17.50 – 17.80.
Have a great week ahead.