The Daily Forex Market Report

Good morning

 

Welcome to Blue Monday, the third Monday of January and officially the most depressing day of the year.  Fortunately for the Rand today is also a US public holiday, and with the Dollar taking the day off the Rand gets to enjoy an extended weekend which isn’t depressing at all. 

 

These are the mid rates at 7:15 today:

 

USD = R18.80	AUD = R11.62
GBP = R22.83	DXY = 109.08
EUR = R19.28	Brent Crude = $80.68 per barrel

 

Market News

 

• After a total collapse earlier last week the Rand managed to continue chipping away at its losses on Friday, this as we opened the day at R18.80 to the Dollar and managed to improve to R18.70 by the close.  With price action in the currency market understandably muted this morning thanks to the Dollar holiday we go into the week still at R18.70, but one would assume that this calm won’t last long given the major developments in the US from later today. 
• Before we get to the week’s main event it’s worth having a look at recent events which have first smashed the Rand and then returned us to our previous trading levels.  Ever increasing Dollar strength over late December/early January had seen our exchange rate move to the R18.70 region, and the primary culprit here was the market adjusting its expectations on FED interest rate cuts down from four to two over 2025.  But then came the blowout US jobs report which immediately saw yet another repricing of two cuts down to just one and the Dollar Index shot north as a result.  Fortunately for the Rand a combination of cooler than forecast inflation readings along with encouraging FED speak last week has seen two cuts come back onto the table, and we are back at R18.70 as a result. 
• We go into the new week back at R18.70 but while today is a US public holiday headlines from the States will be anything but boring, and the effects of which will be seen in the currency market from tomorrow onwards.  Donald Trump returns to the White House this afternoon/evening and once the official ceremony has been completed he is expected to sign at least 50 executive orders on his first day, and some are even suggesting as many as 100.  The content of these orders is unknown as yet but the market will in all likelihood react should anything be seen to be inflationary in nature.
• The following is from Reuters and gives the Rand hope that recent Dollar strength has been overdone, and that a more considered approach by Trump and his team could see the greenback lose ground:  The Dollar is up nearly 14% on the Euro since September and at $1.0273 is not far from last week’s two-year high. But so much is priced in that some analysts feel a more gradual start to US tariff hikes may draw out some sellers. “A forceful start to Trump’s new term could rattle nerves and give the Dollar more support,” said Corpay currency strategist Peter Dragicevich. “By contrast, based on what already looks baked in, we think a more measured approach may ease fears and see the Dollar lose ground, as it did after Trump took charge in 2017.”
• The market is walking on eggshells as we wait for Trump’s inauguration but given his direct approach the wait to see how many of his campaign promises will actually come to fruition will not be a long one.  There is some good news in that Trump and Chinese president Xi had a long phone call Friday which could suggest a more lenient approach when it comes to tariffs, all will be revealed over the next few days!!!
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.60 and R18.90.

 

 

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