The Daily Forex Market Report

Good morning

“I think the million-dollar question with whatever asset class you’re looking at is where do we start to find the news that’s going to turn around risk sentiment? And at this point in time, it’s not clear,” Tony Sycamore, a market analyst at IG.

These are the mid rates at 6:30 today:

Market News

• Another day, another tariff headline induced market selloff and finally the Dollar Index is heading north in this ever-deepening risk-off environment.  But the Rand cares not as local headlines saw us buck the trend yesterday and we open today at R18.30 to the Dollar, slightly better than the R18.34 of Monday morning and in with a chance of posting a small weekly gain. 
• The opening line above which talks to the as yet elusive catalyst that is going to turn this sea of negativity around gives us a window into the daily turmoil that is rattling financial markets, and yesterday was no different.  Soon it will be difficult to keep tabs on the tit-for-tat chain of events but over recent days/weeks Trump has complained about the uneven tariff environment between the EU and the US so he levied a 25% on steel, aluminium and selected autos to which the EU has responded with planned tariffs on US whiskey and other products from early April.  The EU’s move prompted Trump yesterday to threaten a 200% tariff on European wine, cognac and other alcohol products, and the net result of this back and forth exchange of threats was more heavy selling in equities. 
• A renewed bout of risk-off sentiment swept across the market with the S&P500 joining the Nasdaq in correction territory as it closed more than 10% below its recent high which it set as recently as the 19^th of February.  Panicked investors flocked to safe haven assets with the yield on 10 year US Treasuries falling to 4.28% and the Dollar Index heading up to 103.97, and at one point the Rand had fallen to R18.44 given that risk assets were enduring yet another challenging day. 
• The Dollar kept rising yesterday but the Rand made an about turn in the afternoon session as we strengthened back to R18.28, gains that we’ve pretty much held onto overnight.  It must be pointed out that uncertainty around Wednesday’s Budget Speech, and whether it will get cabinet approval, still has the potential to dent the Rand, but yesterday we got very encouraging headlines from the SA / EU summit being held in Cape Town.  In another vote of confidence for SA, similar to that from Microsoft not long ago, the EU has pledged a R94bn investment package covering areas including raw mineral processing, green hydrogen, renewable energy, transport and digital infrastructure, local vaccine and pharmaceutical production and resources for skills development.
• The EU investment announcement was a shot in the arm for the Rand, and SA in general, and the following is from Ursula von der Leyen, president of the EU Commission:  “South Africa has everything to become a global leader: You have clean energy in abundance, from wind to sun. You have raw materials that are critical for electrolysers, including 91% of the world’s platinum group metal reserves. And you have a rising industry to produce clean hydrogen and strong export ambitions. European companies are interested in investing here.”
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.20 and R18.50.

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