The Daily Forex Market Report

Good morning

We’re into December, historically one of the best months of the year for US equities thanks to what’s known as The Santa Rally.  But when it comes to monthly accolades November just set the bar really high with the S&P500 advancing by 5.7%, the Nasdaq by 6.2% and the Dow Jones Industrial Average by 7.5%!!!

These are the mid rates at 5:40 today:

Market News

• The Rand made a valiant attempt at breaking below R18.00 to the Dollar on Friday, this as we made it to R18.01 as the day’s best level, but we had to settle for a close at R18.06 with very little movement over the day thanks to the US market pretty much being closed for a long weekend.  This morning hasn’t started well with us falling to R18.16.
• While movements in the currency market were hard to come by on Friday we did see a slight weakening in the Dollar Index down to 105.61, this thanks to positive inflation headlines for the Euro and the Japanese Yen.  The Yen started things off as Japanese inflation came in at 2.2% which was higher than the market had expected and gave the Bank of Japan further reason to hike interest rates for the second time this year when they meet on the 19^th of December.  Then came Eurozone inflation which also surprised to the upside which in turn suggests that the ECB shouldn’t even consider an outsized 50bps cut at their next meeting, something the market had been worried about, and the Euro jumped onto the front foot. 
• The Dollar has benefited from the notion that the FED will cut rates more slowly than in other developed economies, but Friday’s data reports knocked the Dollar back a peg or two.  The following from CNBC suggests that this will be just a temporary reprieve however with the Dollar likely to climb again next year:  “Given the continued resilience of the US economy and a worsening outlook elsewhere, we don’t think this is the start of a deeper setback for the Dollar,” said Jonas Goltermann, deputy chief markets economist at Capital Economics. “But the bar for a further shift in expected interest rates in favour of the US in the near term is quite high. A period of consolidation into year-end looks to us like the most likely scenario, although the risks remain skewed in favour of the Dollar over the course of 2025.”
• Unfortunately the Rand has started the new week quite badly with a fall to R18.16 in early trade.  While yet to be confirmed, this weakness could be thanks to Donald Trump issuing a direct threat to the BRICS countries and the plan to launch a reserve currency that would rival the Dollar when it comes to global trade.  With South Africa taking over the presidency of the G20 group of nations yesterday that puts us in the spotlight when talk of a BRICS currency does the rounds, and in typical Trump fashion he has threatened significant tariffs on any country that participates in the formation of a rival currency.
• The following is from Business Day:  SA’s presidency of the Group of 20, a club including the world’s wealthiest nations, got off to a rocky start at the weekend after US president-elect Donald Trump threw down the gauntlet to the BRICS bloc. “We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US Dollar, or they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy. They can go find another ‘sucker’! There is no chance that the BRICS will replace the US Dollar in international trade, and any country that tries should wave goodbye to America,” Trump said in an X post.
• Local market data today sees our November manufacturing PMI at 11:00 followed by the month’s new vehicle sales at 2pm.   
• Possible USD mid rate trading ranges in the Rand today are R18.05 and R18.35.

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