The Daily Forex Market Report

Good morning

With the constant stream of market moving headlines at present you’d think that a full day of inactivity for the Rand would be an unlikely event, but that’s exactly what happened yesterday we pretty much traded in a 4c range the whole day.  Boring to say the least!!!

These are the mid rates at 5:50 today:

Market News

• Watching paint dry would have been more entertaining than following the Rand yesterday as we opened the session at R18.46 to the Dollar and then “bounced” between there and R18.50 for the rest of the day.  There was the briefest of runs to R18.43 late on thanks to some Dollar weakness, but these gains have been handed back as we open at R18.50 today. 
• With the currency market being bombarded by fresh headlines on a daily basis of late a breather was long overdue, and that breather came yesterday as no major developments allowed for a day pretty much bereft of movement.  If anything, we saw some slight Dollar weakness as FED Chair Jerome Powell said nothing that the market wasn’t expecting on the first of his two-day congressional testimony while we also were able to enjoy a day with no new tariff announcements out of Washington.    
• Taking a closer look at Powell’s testimony many analysts think he did good job of walking a political tightrope by highlighting that it is not the FED’s job to comment on trade policy, but rather to “react to it in a thoughtful, sensible way and make monetary policy so that we can achieve our mandate.”  Powell confirmed that while the US economy is strong, the labour market is solid and inflation is still above their 2% target the FED have already significantly reduced interest rates, and that they are in no rush to cut further.  The Dollar Index might have slipped a little yesterday but Powell’s comments should prevent any significant declines.
• The reason for the Dollar’s dip yesterday was the market calming down after Trump’s 25% tariff on steel and aluminium imports announcement on Sunday, and realising that these only come into effect on the 4^th of March which leaves plenty time for exemptions or postponements to be announced following what must be some frantic negotiations going on behind the scenes.  With no new “reciprocal tariffs” announced yesterday the market was given the day off, and mild Dollar weakness was the result.
• The following is from Reuters and talks to the market becoming more accustomed to tariff headlines that don’t actually roll out as initially feared:  Traders are becoming more immune to news around potential tariffs, which have unnerved investors on concerns about how they may impact inflation and growth. “We’ve seen a lot of volatility come off of tariff headlines in the last two weeks,” said Helen Given, FX trader at Monex USA in Washington. “What we’re seeing now is that those headlines and those announcements are not necessarily an indication that these tariffs are actually going to be levied, at least not at the time that we think that they might be. So, everyone is just in a wait and see mode.”
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.40 and R18.70.

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