September 23, 2024
MyCURRENCY News | Week 39 2024
What we know
Last week, the rand opened trading at 17.74 to the Dollar and moved speedily towards the lows of the week at 17.35. Importers and individuals looking to invest offshore were the real winners last week as the market traded to create the best levels of the year day-on-day for the entirety of the week.
Last week’s movement was predominantly interest rate driven where the FOMC announced the US interest rate decision on Wednesday, and the SARB announced the SA interest rate decision on Thursday.
After some deliberation around the size of the cut, the Federal Reserve took a more aggressive stance and cut US interest rates by 0.5%, which brought the US benchmark rate down to 5.00%, and as a result the Dollar Index fell to the lows of the year at 100.235.
The SARB took a slightly less aggressive stance and cut the local interest rate by 0.25% which increased the interest rate differential between ZAR and US denominated assets (in favour of the Rand) which is the leading reason for the Rand strength last week.
The latest UK inflation figures and the BoE’s interest rate decision both came in as expected last week with inflation at 2.2% and the interest rate remained at 5.00%.
What others say
CNN – A tycoon collector forbade anyone from selling his coins for 100 years. A century on, the first set just fetched $16.5M
“On Tuesday, just under a year since the 100-year-old order expired, the first set of coins from Bruun’s personal 20,000-piece collection went up for auction in Copenhagen. After nearly eight hours of bidding, the opening 286 lots sold for a combined 14.82 million euros ($16.5 million).”
Moneyweb – Big banks are split on how fast Fed will cut interest rates
“Wall Street’s biggest banks are divided over how fast and deep the Federal Reserve will cut interest rates over the next year, setting the stage for jittery financial markets until the outlook clears.”
Reuters – Harris gaining ground on Trump, TV network polls show
“U.S. Vice President Kamala Harris leads Republican rival Donald Trump by 5 percentage points in an NBC News poll released on Sunday”
What we think
Last week we said… “given we are still behind the major economies in terms of our cutting cycle, the positive impact gradual cuts may have on the SA economy could in fact provide further support to the current upbeat sentiment.”
As mentioned above, the SARB stood in-line with expectations and the impact was as expected, and South Africans can take a sigh of relief as the cost of borrowing decreases while still firmly holding faith in the MPC’s strive to use monetary policy to balance any potential inflationary risks that come with this.
Locally this week, there are no market moving data points being released, and this does lead the Rand to take its guidance from any global announcements. There is a range of manufacturing and services data for the USD, GBP, and EUR being released this week which should spike volatility in the short-term.
Markets will still be fully fixed on the global interest rate cutting cycle with the AUD interest rate decision being released on Tuesday and the CHF interest rate decision being released on Thursday.
Our range for the week: 17.20 – 17.60
Have a great week ahead.