The Daily Forex Market Report

Good morning

 

We about to close out January, already one month down in the new year, but what a week it is stacking up to be.  We’ve got multiple central bank announcements (including the SARB), important inflation and GDP data from the States, a slew of Big Tech earnings and no doubt there’ll be headlines from Trump!!

 

These are the mid rates at 5:50 today:

 

USD = R18.41	AUD = R11.65
GBP = R23.06	DXY = 107.70
EUR = R19.38	Brent Crude = $77.95 per barrel

 

Market News

 

• Friday was another good day for the Rand as we opened at R18.41 to the Dollar and made it to R18.31 as the day’s best level late on.  Of course continued Dollar weakness was the actual reason for our gains, but as a gentle reminder that things won’t always go our way there has been a spike in Dollar strength this morning which sees us open at R18.52.
• The Dollar suffered its worst week since November 2023 last week with a 1.8% fall being the end result.  It would be foolish to think that Donald Trump will not levy any tariffs on America’s main trading partners, and when he finally does we can expect the Dollar to spring back to life, but in the absence of concrete tariff plans last week despite his much publicised campaign promises that was enough to send the greenback sharply lower while allowing all other currencies to gain ground. 
• With data showing that Dollar long positions had built up to a 9 year high leading up to Trump’s inauguration it makes sense that a correction took place when fears around his tariff plans failed to materialise, but the Dollar’s retreat was amplified on Thursday when he used his WEF speech to criticise central banks while demanding lower interest rates.  This was an eye-catching development given that the FED delivers their first policy statement of the year this Wednesday, and while the FED is not expected to cut rates despite Trump’s request/demand the language Chair Jerome Powell uses will bring the relationship between Washington and the central bank into focus as the year progresses.   
• The Dollar has enjoyed a jump in early trade today, this thanks to Trump announcing tariffs and sanctions on Columbia over the weekend.  America has started deporting illegal immigrants but with Columbia refusing to receive two US military aircraft carrying deportees this has been met with a stern rebuke from Trump along with tariffs and sanctions, and with the market being reminded that tariffs are possible at any moment that has seen the Dollar Index recoup some of last week’s losses while putting pressure on the Rand. 
• There’s a lot going on this week and trying to pinpoint to most important parts is a fool’s game, but on the face of it the FED’s policy statement on Wednesday followed by the US PCE inflation reading on Friday appear to be the most important.  Locally we also have the SARB’s announcement on Thursday, and unlike the FED we should see another rate cut of 25bps which would bring prime down to 11%. 
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.35 and R18.65.

 

 

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