The Daily Forex Market Report

Good morning

There are many tests that a friendship could endure and yesterday a Bloomberg TV news anchor questioned what the financial pain threshold could be, this as the leaders of America’s biggest companies who attended Donald Trump’s inauguration in late January have since lost a combined $208bn in personal net worth. 

These are the mid rates at 7:10 today:

Market News

• Losses, what losses?  That’s what the Rand is asking as we managed to hit R18.18 to the Dollar as yesterday’s best level before closing at R18.21.  The last few trading sessions have been good to the Rand but today is by far the week’s main event with local and international headlines holding the potential to move us in either direction. 
• On the local front all eyes are on Finance Minister Enoch Godongwana has he prepares, yet again, to deliver our 2025 Budget Speech.  We all know what happened a few weeks ago when his initial speech was cancelled in an unprecedented move just hours before the event, and with the ANC being forced to backtrack on their plan to hike VAT from 15% to 17% without the GNU’s approval it will be very interesting to see how Godongwana has solved government’s dire revenue requirements.  Have other taxes been raised (unpopular), has spending been cut (unpopular and difficult) or is SARS able to improve its already stretched tax collection process (difficult). 
• Our Budget Speech should take place around 3pm but half an hour before that we get a very important US inflation report with some analysts saying this could be a lose-lose situation for the Dollar.  Only a few weeks ago the US was enjoying an extended run as the world’s economic powerhouse, but with Washington’s at times chaotic approach to trade policies the resultant uncertainty has seen business and consumer sentiment plummet while market data releases have disappointed.  The Dollar has taken a direct hit with the Dollar Index down to its worst level since October last year and suddenly today’s CPI report is even more important than usual.
• Looking at the forecasts US CPI is expected to increase by 0.3% month-on-month at both the headline and core levels while the year-on-year figures are expected to come in at 2.9% and 3.3% respectively, with each of these just below last month’s readings.  If the actual numbers hit the forecast exactly as planned then the Dollar should stay as is, still under pressure but not in a worse position.  Analysts however are suggesting that if inflation comes in lower that could be an indication of slowing US economic activity which would be bad for the Dollar, and if it comes in higher against a backdrop of already weak activity that could present signs of stagflation which is definitely a worst case scenario. 
• The last major headline to take note of this morning, and one that is also keeping pressure on the Dollar, is that Ukraine has agreed to the terms of a 30 day ceasefire as presented by a team of US delegates in Saudi Arabia with the US team now sending the deal to Russia for review.  Nothing has been agreed yet, but just the prospect of a ceasefire, and the possibility of something more sustainable thereafter, has seen the Euro take another leap higher which in turn weighs on the Dollar Index. 
• No local market data today and we wait for the Budget Speech this afternoon. 
• Possible USD mid rate trading ranges in the Rand today are R18.10 and R18.30.

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