The Daily Forex Market Report

Good morning

 

With more than half of the world’s population voting this year 2024 has definitely has been a year of political change, and things are not done yet.  French Prime Minister Michel Barnier faces a vote of no-confidence today while there are calls for South Korea’s president to be immediately impeached. 

 

These are the mid rates at 5:50 today:

 

USD = R18.14	AUD = R11.65
GBP = R22.99	DXY = 106.49
EUR = R19.05	Brent Crude = $73.68 per barrel

 

Market News

 

• Pockets of political turmoil are flaring up. While developments in France have the biggest potential to move the currency market, the good news is that yesterday’s price action was rather sedate.  We opened the day at R18.16 to the Dollar and moved to R18.06 as the day’s best level before closing at R18.08. 
• It takes a lot for local headlines to impact our exchange rate and fortunately, yesterday’s Q3 GDP report was largely ignored, fortunate for the Rand but not so fortunate for the country.  A sense of optimism has washed over SA in recent months with the newly installed GNU making strides towards improving governance and service delivery while the absence of load shedding since March has been touted as a reason for economic expansion.  But not so in the third quarter, I’m afraid as the growth of 0.7% was expected but a surprise contraction of -0.3% was reported yesterday, this thanks mainly to terrible numbers from our agriculture sector. 
• It had been hoped that our economy would expand by 1% in 2024 but after yesterday’s shock report analysts at The Bureau for Economic Research have pointed out that the fourth quarter would need to grow by 2.6% for us to hit that target, a scenario which now looks like a highly unlikely.  Goldman Sachs has revised down their forecasts for our GDP growth from 1% to 0.6% this year while also trimming their 2025 forecast from 1.8% to 1.6%, but while this has been an unwelcomed setback if there is any silver lining it is that the Rand didn’t even blink.   
• Looking further abroad the Dollar Index added small gains yesterday thanks largely to their monthly jobs openings report which was expected to show available jobs climbing from 7.4m to 7.5m, but which eclipsed these expectations with a move to 7.7m.  The report also showed that layoffs in the US have declined and with the report pointing to a robust US labour market, this gave the Dollar a lift, but not too much of a lift as the market is waiting for Friday’s all-important US payrolls report which, along with CPI next week, are the last major data points ahead of the FED’s policy meeting on the 18^th.   
• On the political front, all eyes will be on France today and the following from Reuters suggests that most of the market turmoil is already behind us:  The Euro held its ground above its recent two-year trough, as French lawmakers prepared to vote on no-confidence motions later in the day that are all but certain to topple the government. “We’re at the tail end of the crisis,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York. “There is a vote of no confidence. It passes, but they can’t have an election until next July. So they’ll probably appoint a prime minister and try again, or let Barnier become the caretaker prime minister and pass some laws to keep the government going until July.”
• Local market data today includes our November service PMI at 9:15 and our Q4 consumer confidence report at 10:00. 
• Possible USD mid-rate trading ranges in the Rand today are R18.05 and R18.35.

 

 

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