The Daily Forex Market Report

Good morning

Granted, if it’s your money then you can spend it as you wish, but some purchases are not that ordinary in nature.  Take Justin Sun for example, a wealthy crypto entrepreneur who has just spent R112m on a piece of art called The Comedian which is a banana stuck to a wall with a piece of duct tape.  Rather than taking it home Sun has confirmed he will just eat the banana!!!

These are the mid rates at 5:50 today:

Market News

• The week has had its ups and downs, but it looks like we will be closing things out flat to slightly positive. We opened on Monday at R18.12 to the Dollar and have made trips to R18.22 and R17.91 as the week’s worst and best levels, but we open today at R18.08 with one eye already on the weekend, given that the economic calendar is fairly quiet today. 
• Unfortunately, the SARB delivered a very hawkish cut to our interest rate yesterday with a 25bps move lower in the repo rate, and confirmation that this was a unanimous decision with no talk during their meeting of a 50bps cut at all.  Governor Lesetja Kganyago said that while the SARB sees inflation remaining below target in the near term the bank’s forecasts show inflation likely to tick up as we head into 2025, and this was the reason why a more conservative 25bps cut was decided on.  The Rand did manage to strengthen to R17.98 around the SARB’s announcement but quickly fell back to R18.10. 
• There has been a lot of chatter about the SARB and the Treasury reviewing our 3%-6% inflation target. Still, Kganyago was quick to dispel any notion that the SARB is already working towards a lower target.  The following is from Business Day:  Kganyago denied the Bank was implicitly or informally targeting 3%. “But in case anybody thought so, there’s no point setting a target that is a secret. Because the usefulness of the target is to influence expectations, so if you start a target and it’s secret and nobody knows it … it’s not useful as a policy anchor,” he said, adding the process with the Treasury was concluding.
• The SARB delivering a 25bps cut when a larger 50bps move could easily have been justified was good news for the Rand, and we jumped to R17.98 as a result, but unfortunately, the Dollar was once again on the front foot yesterday which quickly erased all our gains.  The Dollar Index set a fresh one-year high of 107.15 as the market got back to questioning how often the FED will cut rates under the Trump administration, and with US weekly jobless claims dropping to a seven-month low this was just another boost for the Dollar. 
• An ever-weakening Euro is also pushing the Dollar Index higher, and with the common currency’s outsized weighting in the Dollar Index, any Euro softness will always push the Dollar up. Uncertainty around German politics and economic health, concerns about Trump’s proposed tariffs on Europe as a whole, and the recent escalation in the Russia-Ukraine war are all pulling the Euro down while opening the door for further Dollar gains. 
• No local market data today.
• Possible USD mid-rate trading ranges in the Rand today are R17.95 and R18.25.

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