Rand Dollar Exchange Rate: R16.57 as Fed Hike Bets Fade

Good morning

With investing, sometimes all that is needed is a little patience.  For most of 2025, all we heard about was investors wanting to diversify away from the Dollar and Dollar-based assets due to US concerns and supposed superior alternatives elsewhere.  Well, the Dollar is now at a 17-month high against the Euro while the S&P500 and Nasdaq indices just hit fresh record highs.

These are the mid rates at 5:45 today:

Market News

• The Dollar certainly is on a good run, something that can be seen by our exchange rate falling to R16.74 to the Dollar on Monday, but the sort of good news is that while continued Dollar strength is probably to be expected, we’ve just seen a small step backwards, which allowed us to touch R16.48 yesterday before slipping into the R16.50’s.  The US economic calendar is rather light this week, but we do have a few FED speeches to digest today; let’s see if they can add to the Dollar’s wobbly patch. 
• Of course the Middle East saga continues to rumble on, but outside of that there have been two main drivers of currency price action, those being FED speculation and concerns about the global bond market, and while these have pushed the Dollar higher over recent weeks, the past few sessions have seen some much-needed respite.  First came easing FED speculation; this, as bets of an October interest rate hike sat at 70% a week ago, but then cooler-than-expected US inflation and jobs reports saw those bets make an about-turn, and with the probability of a hike falling to 19%, that has taken some of the wind out of the Dollar’s sails. 
• Not only did last Friday’s jobs report disappoint but previous reports were also revised lower.  The following is from Reuters:  US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another interest rate hike from ​the FED this month off the table. “This is a disappointing jobs report and a reminder that the low-hire, low-fire labour market never went away,” said ​Olu Sonola, head of US economics at Fitch Ratings. “Weak job growth, a slightly higher unemployment rate, contained wage gains and downward revisions to earlier payroll estimates give the FED little reason to keep an October rate hike on the table.”
• FED speculation will remain front and centre as we get the latest FED meeting minutes later today and their language will be closely analysed given that the September meeting did deliver a rate hike.  But with last week’s data points taking pressure off the FED to hike again this month the market will probably be paying more attention to speeches from members Christopher Waller, Neel Kashkari and Alberto Musalem to see if they make any reference to the FED now having time to assess incoming data before pulling the trigger again.  Any reference to the FED taking their time should be Dollar negative, the Rand will be hoping that this is the case. 
• Escalating global bond yields have also supported the Dollar of late but while this theme is still very much in play yesterday we saw a slight easing in French yields which have been a main player in this bond narrative.  Without going into detail French politics and government finances are a mess and this has resulted in the gap between French 10year yields and German 10year yields widening to their biggest gap since the Eurozone’s sovereign debt crisis in 2011, a situation that has weighed heavily on the Euro.  But yesterday their frontrunner political candidate, Marine le Pen, outlined €140bn worth of spending cuts should she win next year’s elections, and with French bonds welcoming this proposal the Euro clawed back some ground while helping the Rand touch R16.48.   
• No local market data today. 
• Possible USD mid-rate trading ranges in the Rand today are R16.45 and R16.75.

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