The Daily Forex Market Report

Good morning

It has arrived, my final forex report for 2024!!!  Here’s wishing you and your loved ones the very best for the festive period and I hope that you enjoy a well-deserved break!!!  See you in mid-January…. 

These are the mid rates at 5:35 today:

Market News

• The Rand managed to swerve Dollar strength on Wednesday thanks to positive local headlines, but no such luck yesterday. We opened at R17.68 to the Dollar, made it to R17.62 in what looked like a very promising move, but then tumbled to R17.80 late on. 
• The Rand remains on track to post a weekly gain against the Dollar as we opened on Monday at R18.05 and we still have a bit of a buffer even after yesterday’s fall, but our weekly gain has been dented.  The past two days have seen the Dollar Index climb steadily higher, mainly due to expectations around the FED but also due to the actions of other major central banks, ensuring that the interest rate differential between the US and other countries will remain in place, or even widen.  The ECB cut rates by 25bps yesterday as expected but also cited worsening economic conditions as a reason for many more cuts over 2025 and the Euro sank as a result.  Going even further, the Bank of Canada and the Swiss National Bank both surprised the market with outsized 50bps cuts and with the FED only due to cut by 25bps next week these moves pushed the Dollar Index higher.    
• Speculation around the FED’s possible trajectory in 2025 when compared to other central banks has been another tailwind for the Dollar over recent sessions.  On Wednesday US consumer inflation came in as expected, and a little higher than the month before, and then yesterday their producer inflation was expected to increase by 0.2% but it came in at 0.4% which could mean even higher CPI readings going forward.  The US economy is on a solid footing and that is pulling through into stubborn inflation reports, and this means that the FED can afford to cut next week and then watch how inflation unfolds while other central banks have to keep cutting to boost economic growth.  Music to the Dollar’s ears. 
• The following is from Reuters:  The Dollar rose to a 2 1/2-week high against major peers on Friday, on track for its best week in a month, amid bets that the Federal Reserve would cut interest rates next week but then take a patient approach to further reductions. “What is clear from recent FED speakers and the data flow is that progress toward the inflation target has slowed down and the economy has continued to perform, therefore policymakers can afford to take a more cautious approach to ease over 2025,” said Rodrigo Catril, senior FX strategist at NAB.
• That’s pretty much it for the Rand this year other than the FED’s policy announcement next Wednesday, although hopefully, most market participants will already be in holiday mode by then.  On the whole 2024 has been OK for the Rand as we opened in January at R18.31 to the Dollar, and fell to R19.31 by late February but we’ve steadily improved since then, and look set to close the year better off than where we started which is all we can ask for.  Next year will be an interesting one given all the speculation around how the Dollar will perform under the incoming Trump administration, but let’s not worry about that now, it’s time to down tools and relax!!!
• Please note that while my forex reports end today Foundation Fund Managers is not closing.  We are available for currency trades up until December 27^th, but please get your orders in early if you want to make use of your annual allowance as the very end-of-year rush gets a little crazy. 
• No local market data today.
• Possible USD mid-rate trading ranges in the Rand today are R17.65 and R17.95.

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