The Daily Forex Market Report

12 November 2024

 

Good morning

 

Donald Trump will only be inaugurated as the next US president on the 20^th of January 2025 but that hasn’t stopped the market pricing in the potential effects of his much publicised policies, and this is not good news for the Rand. 

 

These are the mid rates at 5:45 today:

 

USD = R17.95	AUD = R11.77
GBP = R23.07	DXY = 105.63
EUR = R19.11	Brent Crude = $71.61 per barrel

 

Market News

 

• The Rand’s resilience last week in the face of a sweeping Trump victory was rather impressive, this as we made it to R17.27 to the Dollar on Thursday before falling to R17.58 by Friday’s close which was only marginally weaker than where we started last week at R17.52.  Unfortunately there was no such resilience yesterday as we tumbled to R17.97.
• The Dollar Index bounced around last week as the market digested the US election results and that saw the Rand going on a bit of a rollercoaster ride, but ultimately finishing the week close where we started.  No such indecision for the Dollar yesterday with the index climbing to 105.70, its highest level since the 3^rd of July, and in so doing punishing the Rand and all other currencies.  With Republicans reportedly just 4 seats away from reaching the 218 needed to win The House of Representatives a “red sweep” is inching ever nearer, and with Trump’s policies seen as Dollar positive the Rand is taking a direct hit. 
• The following is from Business Day:  According to Wichard Cilliers, director and head of market risk at TreasuryONE, the Rand’s weakness is largely attributed to Dollar strength, fuelled by optimism surrounding president-elect Donald Trump’s policies and anticipated economic data. “Market sentiment remains fuelled by expectations that Trump’s policies, particularly tax cuts and deregulation, will support businesses, potentially driving inflation and limiting the FED’s ability to cut rates,” said Cilliers. “The Dollar’s rise has weighed on global markets, especially commodities, as investors await clarity on US policy.”
• Not good news for the Rand, and absolutely nothing that we can do about it, but we are not alone.  The Euro has and the Chinese Yuan are also cratering thanks to Trump’s direct threats around imposing trade tariffs and the following is from Reuters:  The Euro languished near an almost seven-month trough reached overnight, while the Yuan wallowed close to a more than three-month low with Europe and China both particular targets of potential Trump tariffs. Trump has warned the Euro bloc it will “pay a big price” for not buying enough American exports, with cars a particular target of the incoming U.S. President. He has threatened China with blanket 60% tariffs.
• The currency market is definitely pricing in what it thinks Trump’s policies might mean for the FED but the rest of this week should also be influenced by a combination of US inflation data release along with a barrage of FED speakers.  Tomorrow sees their consumer inflation report, Thursday sees their producer inflation report and we also have 11 FED speakers taking the podium between now and the weekend, most notably Chair Jerome Powell on Thursday.  The market will be looking for any clues on the FED’s thinking around their December policy meeting, and with chances of a 25bps cut falling from 80% to 65% the Rand will be hoping that there is no further reduction in these bets.
• Local market data today sees our Q3 unemployment report at 11:30 followed by September’s manufacturing production stats at 1pm. 
• Possible USD mid rate trading ranges in the Rand today are R17.80 and R18.10.

 

 

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