January 20, 2025
MyCURRENCY News | Week 4 2025
What we know
In a week that was headlined by Trump’s inauguration, the Rand clawed back more of its recent losses, gaining 34 cents in trading. Despite President Trump wasting no time implementing policies, the Dollar index weakened from its recent high, indicating a slowdown in strong Dollar sentiment.
With the inauguration taking the spotlight last week, there was little in terms of major US data releases to entice stronger trade from the Greenback. Continuing and initial jobless claims increased more than expected.
The University of Michigan, which measures consumer sentiment, reported that inflation expectations have been on a slight upward trend since November last year. However, sentiment has decreased slightly in the last month.
Broadly speaking, other global news was overshadowed last week, but the Bank of Japan increased its discount rate by 25 basis points to 0.5%.
Locally, our inflation figures printed a mixed bag. Core inflation, which excludes food and fuel prices came in slightly lower while the broader inflation rate increased, albeit less than forecasted.
What others say
Al Jazeera – Colombia backs down on deportation flights after Trump’s tariff threats
“Colombia’s Gustavo Petro had vowed to refuse deportation flights until migrants were guaranteed ‘dignified treatment’.”
Reuters – Trump discussing TikTok purchase with multiple people, decision in 30 days
“U.S. President Donald Trump said on Saturday he was in talks with multiple people over buying TikTok and would likely have a decision on the popular app’s future in the next 30 days.”
BBC – South African president signs controversial land seizure law
“South African President Cyril Ramaphosa has signed into law a bill allowing land seizures by the state without compensation – a move that has put him at odds with some members of his government.”
What we think
Last week we said… “The general expectation is that the USD will remain overvalued due to the proposed tariffs under Trump’s trade policy. This is raising growing concerns about the devaluation of the currencies of its major trading partners.”
Despite the Rand’s mini bull-run last week, the Dollar remains strong compared to its levels before weakening in December. As the ZAR.USD trading resumed this week, the market gapped up to open at a level seven cents higher than last week’s close.
This week we look forward to three foreign interest rate decisions. The US interest rate decision takes place on Wednesday, and it is expected that the Fed will keep rates unchanged. This will be accompanied by an expected cut from the Bank of Canada and the European Central Bank.
The Reserve Bank’s MPC will also be faced with an interest rate decision this week, and is forecasted to cut rates locally by 25 basis points. A decrease in the local rate while the Dollar maintains its level could help the Dollar to trade stronger.
We will also see inflation data from the US in the form of the Core Personal Consumption Expenditure. We would need to see significantly weak data from the US to enable a continuation of Rand gains seen last week.
Our range for the week: 18.30 – 18.75.
Have a great week ahead.