Rand Breaks Below R16 as Dollar Wobbles Ahead of Busy Week

Good morning

Simply put, we have a very busy week in the world of finance ahead of us.  We’ll be dealing with key US economic data, a major quarterly earnings call, the annual central bankers’ symposium and all of this against a backdrop of escalating geopolitical tensions, but the good news is that the Dollar goes into the new week under pressure which means things are looking great for the Rand on this Monday morning!!!

These are the mid rates at 7:00 today:

USD = R16.00	AUD = R11.46
GBP = R21.84	DXY = 98.82
EUR = R18.69	Brent Crude = $93.03 per barrel

Market News

• While not doing so for long the Rand has managed to break below R16.00 to the Dollar for the first time since the 2nd of March; this as we made it to R15.99 on Friday afternoon for a few moments and then R15.98 again in early trade this morning.  With the week’s packed schedule ahead, it remains to be seen where we go from here, but with Dollar weakness currently in the mix, hopefully we’ll at least manage to hover at these levels for a bit.   
• The Dollar is on the back foot thanks to US Treasury Secretary Scott Bessent’s unexpected announcement last week that the US will be doubling their long dated bond purchases to $4bn per operation in an attempt to keep 20yr and 30yr Treasury yields from moving any higher (the 30yr note hit a 19-year high last week).  Bessent doubled down on Thursday, saying that they could even go higher than $4bn if needed, and even though these numbers are somewhat immaterial given the bond market’s $32trn size, the implication that US policy setters are trying to intervene in the wider market has been enough for the Dollar to take a direct hit while gold and Bitcoin have surged. 
• The following from Reuters talks to the Dollar’s rough patch but also suggests that the strength of the US economy will eventually underpin the Dollar:  Steve Englander, global head of G10 FX research and North American macro strategy at Standard Chartered Bank, argued that what unsettled investors is less the fiscal math than the sense that Bessent is improvising through interventions in illiquid market corners — tactics that can ⁠look like “a panic ​response” and lose credibility if overused. “He really caught us looking the wrong way twice already,” Englander said, but ​he expects the Dollar will be ultimately supported by relatively high yields and economic fundamentals, including strong U.S. productivity and earnings growth.
• Bessent is a busy man at the moment as over the weekend we heard that he’ll be announcing “the single greatest financial offensive ever” later today.  This is the next phase of the US war on Iran, with Bessent set to unveil wide-ranging additions to Iran’s already extensive list of restrictions while also warning that any country seen to be facilitating trade with Iran will also be targeted.  Iran has responded by saying they will tighten their grip on the Strait of Hormuz, including seizing ships that don’t comply with their rules, and we’ll have to see if this clear escalation in tensions results in Dollar strength as a safe haven asset.    
• Lots for the market to keep an eye on today, but the week ahead is similarly loaded with events, including the FED’s preferred inflation reading along with the latest US GDP report on Wednesday afternoon, the quarterly Nvidia earnings report on Wednesday night and then FED Chair Kevin Warsh’s address at the central bankers’ symposium at Jackson Hole on Friday. 
• No local market data today. 
• Possible USD mid rate trading ranges in the Rand today are R15.90 and R16.20.

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