The Daily Forex Market Report

Good morning

Some people just can’t help themselves no matter how stupid the idea is.  Donald Trump’s long time teleprompt operator has been taken in for questioning after it was revealed he made over $90 000 by placing bets on words or phrases that the president would say in speeches. 

These are the mid rates at 6:10 today:

Market News

• Price action for the Rand this week has been driven by two main narratives but unfortunately the effects of one, while positive for our exchange rate, have been somewhat temporary while the other is slowly assuming more dominance.  By Tuesday we had fallen to R16.49 to the Dollar but on Wednesday or fortunes improved with a surge to R16.29, strength that has sadly faded since as we go into todays’ final session at R16.46. 
• The week has seen the market’s focus get split between US inflation reports and tensions in the Middle East, and while the inflation story came in exactly as the Rand was hoping the unfortunate fact is that headlines from the Middle East seem to be getting worse by the day.  Escalating tensions in the area saw the Rand fall to R16.49 but then came a US CPI report that was markedly cooler than expected, and with bets of a July FED interest rate hike evaporating that delivered a direct hit to the Dollar while the Rand shot to R16.29. 
• Middle East hostilities did not cool however and with Brent Crude climbing to $85/barrel, coupled with Donald Trump mapping out the next steps for the US where they plan to destroy Iranian civilian infrastructure along with power generating plants, that was enough to see the Dollar attract safe haven flows while the Rand wilted.  We got a slight reprieve yesterday when the US producer inflation report also came in cooler than expected but that was tempered by their weekly jobless claims report which was also lower than forecast, but in this instance a lower claims number suggests the FED need not rush into rate cuts and that would have supported the Dollar. 
• Adding to the Dollar’s allure yesterday was their retail sales report which advanced from the month prior and is further confirmation of a healthy economy.  The following from Reuters talks to the “Dollar Smile” where it can go up either due to the strength of the US economy or due to risk aversion, and both of these are at play right now:  “The USD remains the highest-yielding safe-haven currency ‌in the ⁠G10 complex,” OCBC strategists said in a note. “Near-term FX price action is likely to continue reflecting the ‘USD smile’ framework, under which the greenback tends to outperform when markets price either stronger US growth and higher rates or a rise in global risk aversion,” they wrote.
• Looking ahead the Rand is seriously hoping that US/Iran headlines improve soon as the US economic calendar has no major data releases next week and the currency market will be trading exclusively on geopolitical developments.  We do get our local interest rate report next Wednesday followed by the SARB’s interest rate announcement on Thursday, hopefully those pack enough of a punch to support the Rand.   
• No local market data today. 
• Possible USD mid rate trading ranges in the Rand today are R16.30 and R16.60.

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