The Daily Forex Market Report

Good morning

Carnage on Wall Street yesterday as the market didn’t take kindly to the sitting US president declining to rule out an imminent recession as a result of his trade policies.  That brings the S&P500’s losses to over $4 trillion since its recent peak on the 19^th of February and yet somehow the Rand remains unscathed. 

These are the mid rates at 7:15 today:

Market News

• Looking at the Rand / Dollar chart yesterday you’d be forgiven for thinking that not much is going on at the moment, but that’s definitely not the case.  We opened the week at R18.34 to the Dollar, had a brief look at R18.23 before closing the day at R18.32 which, as far as Rand movements go, made for a relatively boring day. 
• Boring for our exchange rate yesterday and equity investors would have loved the same to be true in their part of the market, but unfortunately things were very different.  Financial news outlets around the world kept playing Donald Trump’s Fox News interview on repeat the whole day, an interview where he acknowledged that his tariff policies would bring some disruption to the US economy while also declining to rule out the possibility of a near term recession.  The market trades on sentiment and despite recent US market data not being fairly robust investors didn’t hang about as they rushed for the exit.   
• The following is from Reuters and underlines the panic being seen in the stock market:   Stocks slumped globally on Monday while US bond yields dropped as investor worries about the potential economic slowdown were exacerbated after President Donald Trump did not rule out a recession resulting from his tariffs. Investors had started seeking safety as early as Sunday when Trump in a Fox News interview talked about a “period of transition” while declining to predict whether his tariffs on China, Canada and Mexico would result in a US recession. “If the occupant in the White House is himself not terribly optimistic about short-term growth expectations, why should the market be optimistic about it?” said Will Compernolle, macro strategist at FHN Financial.
• Equities are in meltdown mode which happens, and what also happens is they recover after the crash which is what Jim Cramer from CNBC is alluding to with the following quote: “Even when it’s terrible out there, and it is terrible, stocks do bottom, and you have to do a little buying.”  But the curious thing this time around is that the epicentre of the panic is the US, and so while risk-off sentiment is smashing stocks the Dollar is finding zero love as a safe haven retreat.  The Dollar Index, down considerably from its peak in early February, barely moved yesterday and so the Rand is drifting sideways in the low R18.30’s blissfully unaware of the wider market turmoil.
• The international data calendar is rather sparce today and so we can expect the market to continue trading on yesterday’s headlines, unless of course something new comes out of the White House later on.  Failing that the currency market will have its eye on tomorrow’s US consumer inflation report as a potential catalyst for direction.
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.15 and R18.45.

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