August 20, 2024
MyCURRENCY News | Week 34 2024
What we know
Last week saw major moves in the ZAR.USD as the rand was able to push stronger against the Greenback on every trading day. We commenced trading at 18.28 on Monday and powered through the week, for an impressive 45c gain, to close off at 17.83 on Friday evening.
With global geopolitical tensions still running high and the market still expecting the first interest rate cut from the US in September, the door was left wide open to see some Rand strength push through.
The big news this week is the three-day Jackson Hole Symposium where Fed Chair Jerome Powell will share the results of the FOMC meeting held on Wednesday. This is one of the year’s biggest economic conferences attended by central bank leaders globally.
With traders almost fully pricing in the likelihood of the US Fed Funds rate coming down by 25 basis points in September, the Dollar has weakened slightly against other major currencies, despite the US having held out longer than other major market economies in cutting rates.
Locally we have seen some Rand positivity since the formation of the GNU, spurred on by an economy that, post-election, seems to be functioning well in the absence of loadshedding under an economically focused coalition. This, together with a weakening in the Dollar, has opened the door for the Rand to surge stronger.
An interesting point to note is that the Rand was the best performer against the Dollar, among the 150 currencies tracked by Bloomberg, with a 2.4% positive move last week. (Business Tech, 2024)
What others say
Financial Times – Kamala Harris backs plan to raise US corporate tax rate to 28%
“Kamala Harris is aiming to increase the US corporate tax rate to 28 per cent if she wins the White House in November.”
Daily Maverick – VBS pals Floyd Shivambu and Jacob Zuma snuggle up following EFF’s broken bromance
“Floyd Shivambu, the EFF’s former deputy president and chief whip in Parliament, will feel right at home with his fellow VBS beneficiary.”
Reuters – ECB may need to cut rates again in Sept, Rehn says
“The ECB was among the first major central banks in the world to cut interest rates in June, partially reversing a record string of hikes, but held rates steady in July and gave no firm signals about its upcoming Sept.12 meeting.”
Daily Maverick – After the Bell: Is the JSE All Share trading at a record high an act of cynicism?
“What does it mean that the JSE All Share is trading at a record high? Not to be too much of a bear, but this particular record does invite investors to curb their enthusiasm. There are three reasons to look at it slightly askance.”
What we think
Last week we said that,“A notable event to keep on your radar for this week is the US inflation figures being released on Wednesday, which could spike volatility and hint towards whether the US interest rate cut is likely to come to fruition in September.”
Weaker data from the US, specifically the core inflation rate, will likely lead to a Doveish Fed ahead of the September meeting. Powell may likely provide that last reassurance required on Friday to be certain whether rates will come down as expected in September.
Other than the Jackson Hole Symposium, it is a quiet week in terms of data releases. If the Rand can maintain its push stronger, there is very little in terms of scheduled global data to disrupt this.
Our range for the week: 17.70-18.05.
Have a great week ahead.