Forex Report

Good morning

 

It’s the end of an era as Warren Buffett, the Oracle of Omaha, confirmed that he will be stepping down as the head of Berkshire Hathaway at the end of the year.  Seriously big shoes for his successor, Greg Abel, to fill even in he has been groomed for the job since 2021 and has spent 25 years working at Berkshire.   

 

These are the mid rates at 5:50 today:

 

USD = R18.35	AUD = R11.87
GBP = R24.42	DXY = 99.76
EUR = R20.82	Brent Crude = $59.07 per barrel

 

Market News

 

• The Rand had made it to R18.48 to the Dollar by Friday morning and it was hoped that our strong performance would continue before the week was up, and boy did we deliver on those hopes!!  A daily best of R18.29 was achieved late in the day and we open this morning at R18.35 which is a healthy buffer below R18.50 which had proved quite stubborn for a while. 
• It would be foolish to think that there aren’t bouts of volatility lying in wait for us but for the time being some much needed stability has returned to the market thanks to strengthening risk-on sentiment.  Friday saw the S&P500 register its 9^th consecutive day of gains, a run that hasn’t been achieved in over 20 years, while the Rand also continued its recent move stronger as a risk asset.  Crazy to think that heightened uncertainty had sent us to R19.89 to the Dollar less than 4 weeks ago, but now we are on a charge towards R18.00 should sentiment remain unchanged. 
• With most of South Africa taking Friday off it was a very quiet affair on the local front but internationally all eyes were on the monthly US jobs report as this held the potential of confirming just how badly tariffs had impacted on the US economy.  Forecasts called for new jobs to fall from 228 000 in March to 130 000 in April and so a huge sigh of relief was breathed when 177 000 jobs were announced coupled with the US unemployment rate staying steady at 4.2%.  Granted, April might still be too soon for tariff impacts to be seen in the hard data, but with the numbers holding up while trade deals seem imminent that was enough for the market to cheer. 
• The following is from Reuters and underlines the positive news flow at present:  Wall Street and European stocks rallied and US Treasury yields surged on Friday as investor risk appetite was strengthened by a strong employment report and signs China is open to tariff negotiations. “There was really not anything not to like about the jobs data; it indicates that the economy is doing just fine,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. “There are still discussions about the impacts of tariffs, but so far at least, that data has not shown up in a lot of the numbers.”
• Strong jobs data was a shot in the arm for risk assets but unfortunately it was also good for the Dollar which is why we have given up a little ground to open at R18.35 today.  The FED announces their next policy decision on Wednesday and any thoughts of an “emergency” rate cut have pretty much vanished while chances of a cut in June have also fallen from 64% to 37%.  Like all currencies, the Dollar reacts negatively to the prospect of lower interest rates, so with the market now predicting fewer cuts this year that is a tailwind for the Dollar, and the reason why we haven’t gained even more ground. 
• No local market data today. 
• Possible USD mid rate trading ranges in the Rand today are R18.25 and R18.55.

 

 

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