The Daily Forex Market Report

Good morning

Fairy tales are great for the imagination, like in Pinocchio for example where Geppetto is swallowed by a whale only to be spat out later.  Well, that scene became a reality for Adrian Simancas when a humpback whale swallowed him and his kayak off the coast of Chile before spitting him back out, and his dad caught the whole thing on camera!!! If you haven’t seen the footage it’s worth doing a quick search. 

These are the mid rates at 5:55 today:

Market News

• Definitely no such excitement for the Rand as once again we spent most of the day trading around R18.50 to the Dollar, a trend that has been in place for the whole week.  There was a brief slip to R18.59, presumably on tariff concerns, but those losses were quickly recovered and we go into the week’s final session at R18.49.
• Trump’s tariff approach is falling into a predictable pattern, and long may that continue!!  Last week he announced tariffs on Canada and Mexico which sent the market into a tailspin before postponing them for 30 days at least once a partial agreement had been reached.  This past weekend he announced tariffs on all steel and aluminium imports to the US which spooked the market, but not as much as the Canada/Mexico headlines, but things calmed down when he confirmed that these will only take place from the 4^th of March.  Yesterday we had the briefest of Dollar spikes when Trump signed an executive order on reciprocal tariffs for all countries taxing US goods, but, like before, these will not be implemented until a study on every trade agreement has been completed. 
• In the space of two weeks the market has seen three instances where tariffs are “promised” only for those promises to be walked back and the result has been an easing of frayed nerves while equities return to favour and the Dollar sags.  All three US indices posted healthy gains yesterday once the reciprocal tariffs were delayed until April at the earliest while the Dollar Index has fallen from 107.67 to 107.09.  Unfortunately this Dollar weakness hasn’t pulled through to the Rand just yet, but maybe we’ll see more of a move below R18.50 today. 
• The following is from CNBC:  The greenback briefly pared losses before falling to lower levels after US President Donald Trump said he would levy reciprocal tariffs on every country that charges duties on US imports. The tariffs were not going into effect on Thursday but could begin to be imposed within weeks as Trump’s trade and economic team study bilateral tariff and trade relationships, a White House official told reporters. “The message from Trump seems to be that – we’re going to get you, but not today. And the market seems to take comfort from that,” said Steve Englander, Head, Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank’s NY Branch.
• Inflation concerns have also been driving price action in the currency market this week with a hotter than forecast US CPI report on Wednesday supporting the Dollar.  The good news is that while yesterday’s US producer inflation reading also came in higher than expected there was some coolness in important subcomponents which suggests that the FED’s preferred inflation measure, the personal consumption expenditure index, will behave when released on the 28^th of Feb.  This assumption has seen bets of FED rate cuts this year tick slightly higher and would also have weighed on the Dollar.   
• No local market data today. 
• Possible USD mid rate trading ranges in the Rand today are R18.35 and R18.65.

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