September 09, 2024
MyCURRENCY News | Week 37 2024
What we know
With the absence of any market moving news over the past 2 (and a bit) weeks, range-bound trading was the result, as the USD.ZAR kept within its established range of 17.67 and 18.02 for the most part of last week, spiking briefly to R17.60 on Friday afternoon.
It’s quite clear that any form of Dollar strength purely serves as a market correction before it makes lower lows, as the steady stream of weak US data across the board weighs the currency down.
Last week, two major events impacted market volatility:
- JOLTS Job Openings (Tuesday): This report highlighted a continued slowdown in the U.S. economy, with 240,000 fewer job openings compared to the previous month.
- Non-Farm Payrolls (Friday): While the data came in softer than expected, it still showed a stronger performance than the previous month.
The global interest rate cutting cycle continued, with The Bank of Canada deciding to cut their overnight rate by 0.25% after two consecutive interest rate cuts in June and July.
Locally our own GDP figures were released, which came in at 0.3% Year-on-Year, softer than the forecasted 1.6%, and 0.4% Month-on-Month, on par with the forecasted figure. Outside of this release, it was a quiet week locally with the omission of any political noise aiding to the Rand strength.
What others say
Business Tech – What interest rate cuts in South Africa will mean for the rand
“The South African Reserve Bank (SARB) is widely expected to cut interest rates in South Africa this month, which could be good news for the rand.”
BBC – ‘Stick to policy’: Voters want less drama in Harris-Trump debate
“The event represents an opportunity for a do-over for both parties and the consensus among voters is clear: they want more policy and less political sparring.”
Reuters – Russia focusing on American social media stars to covertly influence voters
“Russia is increasingly turning to American social media stars to covertly influence voters ahead of the 2024 presidential election, according to U.S. officials and recently unveiled criminal charges.”
Visual Capitalist – Gold Prices by U.S. President (1989-2024)
“The surge in gold value this year has largely been driven by increased central bank demand amidst an increasingly complicated geopolitical and financial landscape.”
What we think
Last week we said that,“The “better than expected” GDP will not be strong enough to prevent a rate cut in September but may influence the magnitude of the expected rate-cut if we see more bullish data.”
It is virtually certain that the U.S. will cut interest rates next week, but debate remains over the size of the cut. The market is split 75/25, favouring a 25-basis-point cut over a 50-basis-point cut, as outlined in the CME FedWatch report.
With CPI figures this week, the market will have its final piece of the puzzle regarding the interest rate decision, with inflation forecasted to fall to 2.6% Year-on-Year.
The EU have their interest rate decision on Thursday, with the forecast for a 60-basis point cut as the market expects a more aggressive action from the ECB.
Apart from global interest rate decisions taking centre-stage now, the Trump v Harris debate is on Tuesday, and with the race this tight we will be looking for any indication for one of the candidates to break away – and with this, we expect a reactive market.
Our range for the week: 17.75 – 18.15.
Have a great week ahead.