November 20, 2024
MyCURRENCY News | Week 47 2024
What we know
The market saw some follow-through last week on the post-election US Dollar strength, which caused the USD.ZAR to trade from a low of R17.55 to a high of R18.39 – levels that have not been seen since August.
Last week’s large-range trading was more a by-product of the recent election-driven volatility than a response to specific data points, and yet again speaks to the interpretation of the health of the US economy going into Trump’s second term.
High-impact data points, including the US CPI and PPI figures, were also released last week. However, as they aligned with forecasts, they had little influence on market movement beyond reinforcing the prevailing trend of USD strength.
Jerome Powell addressed the nation, emphasizing recent US economic growth and the strength of the labour market. He hammered on the point of balancing inflationary pressures – bringing them closer to the target rate – with interest rates coming down, allowing for stimulus in the economy.
Locally, there were no high impact drivers, and the Rand took most of its guidance from a volatile Dollar.
What others say
Moneyweb – Africa central banks seen cutting while they can after Trump win
“Of the 14 monetary authorities due to give rate decisions, eight including South Africa and Kenya are foreseen cutting, five are expected to stand pat and one – Nigeria – is predicted to hike.”
Reuters – UK economy contracts in September in blow to Reeves’ growth push
“Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter, data showed on Friday, an early setback for finance minister Rachel Reeves’ ambitions to kick-start a sustained pickup.”
CNBC – China is doubling down on Latin America ties to bolster influence and trade, experts say
“The Peru port under the Belt and Road initiative – China’s global infrastructure development strategy – will reduce shipping times from the Latin American country to China by 23 days, cutting logistics costs by at least 20%, Chinese Foreign Ministry Spokesperson Lin Jian said.”
What we think
Last week we said… “There may be some follow through on the Dollar strength going into this week, however markets should settle as the inflow of new information gets digested.”
Boy, did we get this right, and wrong…
The market saw some follow through on the Dollar strength, which lead the Dollar Index to move 2% stronger, but didn’t show any intention to settle as the USD.ZAR closed above the R18 handle.
Looking at this week, and the lack of any US data points, we would expect to see the USD cooling-off and allowing the Rand to recoup some of its losses from last week.
Locally, there are some high impact data points being released, namely our inflation prints on Wednesday and interest rate decision on Thursday. With back-to-back announcements out of South Africa and a cooling USD, the USD.ZAR is likely to be primarily influenced by these two developments.
In other news, there is Manufacturing and Services data out of the US, UK and EU which may add some volatility, as well as Retail Sales in Canada.
Our range for the week: R17.70 – R18.20.
Have a great week ahead.