TO TRUST OR NOT TO TRUST?
November 13, 2024
The Great American Election Circus
November 15, 202413 November 2024
Good morning As the Trump Trade rolls on the Rand is finding life rather difficult but today will see the market turn at least some of its attention back to economic indicators. The only problem is that today’s data has the potential to make things even worse for us. These are the mid rates at 5:50 today:| USD = R18.10 | AUD = R11.82 |
| GBP = R23.06 | DXY = 106.00 |
| EUR = R19.22 | Brent Crude = $72.14 per barrel |
- More pain for the Rand yesterday as we crashed through R18.00 to the Dollar by falling to a session low of R18.17. Hopefully this Dollar rally that is inflicting all of our pain will run out of steam at some point, but for now we remain at the mercy of the greenback.
- With the Dollar Index marching ever higher there literally is nothing that the Rand can do to avoid giving up ground and we are left with no choice but to sit back and watch how high the Dollar will go. The index climbed to 106.16 yesterday, a new recent high that stretches back to early May this year, and with the Dollar still finding huge support from Donald Trump’s sweeping victory we can only hope that something will come out of the woodwork to stem the its flow.
- The following is from Reuters and underlines how the Dollar’s advance has been left unchecked in the absence of any meaningful economic headlines: The Dollar rose to a 6-1/2-month high against major peers on Tuesday amid expectations of inflationary import tariffs from Republican President-elect Donald Trump. Higher tariffs are expected to push up prices, leaving the FED less scope to cut interest rates. The yield on benchmark US 10-year notes rose 13.1 basis points to 4.439%. “It’s still an extension of the post-election moves; the economic calendar has been relatively light although it’s picking up later in the week but for now the market is focusing on the implications of a second Trump term, particularly policies that would be positive for the Dollar such as potential higher tariffs,” said Vassili Serebriakov, an FX strategist at UBS in New York.
- The Rand hoping that the Trump Trade gets countered by market data that would typically weigh on the Dollar but there is a sense of nervousness as we wait for today’s US consumer inflation report. CPI has been steadily heading back towards the FED’s 2% target, and in so doing allowing the FED to start their interest rate cutting cycle with cuts being delivered in September and earlier this month, but forecasts suggest that CPI could increase from 2.4% to 2.6% which is not what the FED wants to see. Bets of another FED cut in December have already fallen to 58% which has been a tailwind for the Dollar, and it would be bad for the Rand if these odds moved even lower after today’s CPI report.
- The following is from CNBC and reminds us that a hotter than expected CPI reading could further reduce the chances of a December cut: On Wednesday, investors will get a fresh read on U.S. inflation when the October Consumer Price Index (CPI) report is released later in the day. The core gauge is expected to rise 0.3%, though anything above that could further reduce the chance of a December easing. “Focus is likely to shift back to inflation and FED policy in the latter part of the week, but whether that brings an unwinding of Trump trades remains to be seen,” said Charu Chanana, chief investment strategist at Saxo.
- No local market data today and we get the US CPI report at 3:30pm.
- Possible USD mid rate trading ranges in the Rand today are R17.95 and R18.25.
