
The Daily Forex Market Report
February 3, 2025
The Daily Forex Market Report
February 5, 2025Good morning
What a week it has been, and its only Tuesday morning!!! We always knew that life under the Trump administration was going to be an interesting time but past 48 hours have been exceptionally eventful.
These are the mid rates at 5:50 today:
USD = R18.71
| AUD = R11.63 |
GBP = R23.29
| DXY = 108.71 |
EUR = R19.34 | Brent Crude = $75.54 per barrel |
Market News
- Uncertainty, and the resultant volatility was the name of the game yesterday as multiple headlines drove us to R19.03 to the Dollar in early trade before the Rand managed a steady recovery to close the day at R18.80. Things have improved even further overnight and we go into today at R18.71.
- Where to start?!?! The bulk of yesterday’s pain for the Rand came from Dollar strength, this as the Dollar Index raced to a three week high of 109.88 as soon as the Asian trading session opened for business. The market knew that Donald Trump had threatened Canada, Mexico and China with tariffs, with early February the proposed implementation date, but the market was clearly too optimistic that these threats were just negotiating tools, and that the actual tariffs wouldn’t materialise. Over the weekend Trump confirmed that it was all systems go and the global financial market went into an immediate state of panic.
- Trump’s confirmation that the tariffs would come into effect at midnight last night rocked the market with equities selling off hard and the Dollar index spiking. Suddenly the market realised that a tariff structure way bigger than anything Trump used in his first term was only hours away and the only logical outcome was a severe bout of risk-off sentiment. There was one glimmer of hope and that was Trump also confirming that he had calls planned with the presidents of Canada and Mexico late yesterday SA time and as it turns out he has reached a deal with both countries. The tariffs have now been delayed for 30 days at least so that the terms of the deal can be implemented, and the market’s relief can be seen in all areas.
- Equities reversed almost all of their losses on this news while the Dollar Index is steadily falling, and the following is from CNBC: Hong Kong shares hit two-month highs, US equity futures rose and currencies swung to-and-fro in big ranges as investors scrambled to keep up with sudden changes in US trade policy. The Euro went on a white-knuckle ride to $1.0125 before roaring back to $1.0320 inside 24 hours as Trump’s dealmaking seemed to underscore that everything was negotiable. “We understand Trump is still using the same strategy or tactic – launching very threatening tariffs, but leaving room for negotiation,” said Steven Leung, who handles institutional trading at stockbroker UOB-Kay Hian in Hong Kong. “It all makes us feel that it’s not a very firm policy yet. No need to worry too much.”
- As mentioned, most of our earlier pain came from Dollar strength but it’s safe to assume that some Rand pressure was also the result of Donald Trump singling South Africa out for special attention. His views on the recently signed land expropriation bill saw him post on social media that all US funding to SA will be halted pending a full investigation, and with us being thrust into the spotlight like that this could only have weighed on the Rand. Fortunately our government has not launched into a social media debate and seems to be seeking more formal diplomatic talks, so hopefully any further damage to the Rand can be contained.
- No local market data today.
- Possible USD mid rate trading ranges in the Rand today are R18.60 and R18.90.
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