Rand Outlook Today: R16.46 to the Dollar Ahead of US CPI

Good Morning

The rand outlook today depends on one event: the US inflation report at 2:30 pm. The rand opens at R16.46 to the dollar. That is yesterday’s best level. The challenge now is to hold on to the gains made this week.

There is also good news from our team. Glen Steward is Foundation Fund Managers’ Chief Investment Officer and Chairman of US-listed Stewards Inc. He will ring the bell to open the Nasdaq in New York at 3:30 pm our time.

Today’s mid rates at 6:30

Currency or market	Rate
US dollar	R16.46
Australian dollar	R11.53
British pound	R21.86
Euro	R18.46
Dollar Index (DXY)	102.08
Brent crude	$106.19 per barrel

Why the rand has gained this week

The rand has gained over the first two trading sessions of the week. The Dollar Index reached an 18-month high last week. Since then, it has taken a slight breather.

Oil also moved lower on Monday and Tuesday. This happened despite deadly Houthi attacks on Saudi Arabia’s main airport over the weekend. Lower oil is good for the euro, which depends on energy imports. French bond yields also eased. As a result, a stronger euro weighed on the dollar and helped the rand.

What the US inflation report could mean

A softer jobs report for September has changed the outlook. Several Fed members also sounded cautious about an October rate hike. Because of this, the chance of a hike this month has dropped below 20%.

However, today’s report could change that. Markets expect inflation of 3.6%. A higher number would raise rate-hike speculation and lift the dollar. Reuters quoted Carol Kong, a currency strategist at Commonwealth Bank of Australia, who warned that “the risk is the core CPI surprises to the upside.”

Oil prices and the euro

Brent crude jumped to $107 per barrel in early trade. It has since eased to $106. Renewed concerns about Middle East supply caused the move. Higher energy prices tend to weigh on the euro. Therefore, the rand could face pressure even before the inflation report.

Expected trading range

There is no local market data today. We expect the dollar mid rate to trade between R16.35 and R16.65.

Global investment offering

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Want to know more? Contact Hadyn Little on 084 910 8078 or [email protected].