The Daily Forex Market Report

Good morning

In the world of equity investing the saying goes, “it’s not about where you open, it’s about where you close.”  The Rand is taking a leaf out of that book after opening on Monday morning under severe pressure, but that’s just a distant memory now as we look to close the week out significantly stronger. 

These are the mid rates at 5:45 today:

Market News

• The week started out in disastrous fashion with the Rand plunging to R19.03 to the Dollar, but we’ve notched up daily gains since and yesterday was no different as we opened at R18.55 and made it to R18.42 in late trade. 
• Anxiety in the market was pushed to extreme levels on Monday morning with the US confirming that a 25% tariff was scheduled for all imports from Mexico and Canada at midnight that day, and the unavoidable consequence was punishment for the Rand.  Things have changed significantly since for two reasons; firstly, those tariffs never actually happened as Donald Trump agreed to postponements thanks to deals struck around increased border security, and secondly, while a 10% tariff on Chinese goods was implemented there has been no further tariff talk from the White House which has allowed the market to exhale. 
• Anxiety around tariffs has eased a lot but it certainly hasn’t left the market completely, this as conversations between the US and China have yet to take place while earlier this week Trump said that Europe was definitely in line for tariffs once he gets round to it.  But for now no news is good news, and after tariff headlines dominated the market over Monday and Tuesday the sudden absence of any updates along with the demonstration that Trump is using tariffs as a negotiating tool has seen the Dollar fall back while the Rand is on the front foot.
• With tariff headlines temporarily off the market’s radar that means we can turn our attention to today monthly US jobs report.  The forecast is for 170 000 new jobs to have been created in January while their unemployment rate should stay steady at 4.1%, and as always if we see a meaningful deviation from this forecast then we can expect the currency market to react.  In terms of the FED, we’ve had numerous members this week saying that they are in no hurry to cut rates again so if the jobs report comes in strong, or if unemployment falls, that will strengthen the case for an extended FED pause and could benefit the Dollar.
• Not much else to report as we head towards the weekend.  Last night’s State of the Nation Address seems to have been well received without causing much of a stir and we now wait for Enoch Godongwana’s Budget Speech in two weeks’ time.  For now the Rand is enjoying the relative quiet in terms of international headlines and hopefully we can move even further below R18.50 before the week is done. 
• Local market data today sees our foreign exchange reserves at 8:00 followed by the SACCI business confidence index later in the day. 
• Possible USD mid rate trading ranges in the Rand today are R18.30 and R18.60.

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