December 02, 2024
MyCURRENCY News | Week 49 2024
What we know
Last week saw the second consecutive week of the USD.ZAR trading around the 18.00 big figure with the Dollar finding resistance at the 18.20 level and the Rand struggling to break below the support, around the 18.00 level. With continuing positive sentiment in South Africa, the Rand is somewhat overshadowed by the lasting effects of the recent US election.
As Trump continues building his cabinet of economically focused but politically inexperienced members the Dollar continues to maintain its momentum. Time will tell whether this widely criticised selection, although in line with his policies to ‘Make America Great Again’, will be able to run a cohesive well-functioning government or whether they will be puppets carrying out Trump’s wishes.
US data has been stable enough to support the Dollar momentum with Quarterly GDP printing just slightly lower than anticipated at 2.8% and the MoM core price index coming out at 0.3% as expected.
With the maintained momentum of the Dollar, the Rand has struggled to make a comeback after losing significant ground just over three weeks ago moving from the best levels we have seen this year, breaking out above the 18.00 level. In the absence of major market moving news locally, the ZAR has been left to wait for any cracks in Dollar sentiment to push stronger once again.
What others say
CNBC – China bonds rally with 10-year yield hitting a multi-decade low on rate cut expectations
“China bonds rallied Monday with the 10-year yield dropping below the key psychological level of 2% to hit a multi-decade low, amid expectations that Beijing could expand its stimulus measures to shore up the economy.”
The Guardian – Trump threat of 100% tariffs against Brics nations raises trade war fears
“A 100% tariff at the US border, if implemented, would drive up sharply the cost of goods from Brics members, fuelling US inflation and destabilising global trade flows.”
Business Tech – Foreign investors take R124 billion out of South Africa
“South Africa’s market has seen a substantial rally, but more is still needed to convince international investors.”
What we think
Last week we said, “It is difficult to imagine another week where the Dollar pushes 1 – 2% stronger as Trump’s policy implementation will not be a short-term process. Regardless of how well the US economy may be doing from the outset, there will be the internal battle between Jerome Powell and the FED managing monetary policy efficiently, and Trump’s intention to reduce taxes and increase government spending.”
In a week of volatile trading that concluded in a negligible net gain for the Dollar we see that there may well be an internal struggle that unfolds as Trump takes over the reigns and begins to steer in a new direction.
This week, as with every first week of the month, we look forward to the employment data release from the US in the form of non-farm payrolls and unemployment figures released on Friday. The previous release came in staggeringly short of the expectation at only 12,000. This week’s release is estimated to be more in line with previous months at 183,000. If this figure is realised it may provide even further Dollar momentum.
Locally, we look forward to QoQ and YoY GDP data to provide insight into the state of the economy as we head into the festive season, which usually brings economic positivity. This will be echoed by GDP releases for the Eurozone area for the same time periods as well as the unemployment rate for the European Union.
Our range for the week: R17.95 – 18.30.
Have a great week ahead.