Forex Report

Good morning

Deadly seagulls is not a concept that many of us have considered but calls in Scotland are growing for a nationwide “seagull summit” to discuss the birds and their nuisance factor.  In a parliamentary debate former Scottish Tory leader Douglas Ross said “the government needs to finally act before we see someone killed due to being attacked by a gull.”

These are the mid rates at 6:55 today:

Market News

• Yesterday was another good one for the Rand as we managed shake off any concerns around local political developments and strengthen to R17.57 to the Dollar which equals our best level for the year.  Dollar weakness is the primary driver of or gains, but we did get some positive local market data which would have helped. 
• After suffering its worst first half to a year since 1973 the Dollar Index fell even further yesterday as it hit 96.37, a fall that helped the Rand touch R17.57 while keeping our hopes of a move below R17.50 alive.  The Dollar’s slide was partly due to comments from FED Chair Jerome Powell who, while attending a central bankers’ summit in Portugal, said that he could not rule out July when it comes to the next interest rate cut, but also that the FED is going meeting to meeting when assessing the incoming inflation and labour data.  Bets of a FED cut in September are pretty much guaranteed while July’s odds are slowly moving up, and the Dollar is on the back foot as a result. 
• Another source of Dollar weakness has come from the progress being made in passing Donald Trump’s One Big Beautiful Bill Act, or OBBBA as it’s now known.  After a marathon voting session that lasted 27 hours the US Senate passed the bill which now goes back to the House of Representatives to be adopted before landing on Trump’s desk to be signed into law, and while the bill has both critics and supporters the market is taking a negative view due to the estimated $3.3trn in additional deficit that it could layer on top of an already sizeable US debt pile.   
• The Dollar did manage to claw back some lost ground which sent us back into the R17.60’s, this as their monthly job openings report came in a lot higher than expected which points to strength in the labour market and which in turn eases some pressure on the FED.  All eyes now turn to tomorrow’s monthly US jobs report with the forecast calling for 110 000 new jobs added in June, and if we get something significantly higher that would be a further tailwind for the greenback (labour strength) while a poor report could send the Dollar Index even lower. 
• With the Dollar having fallen appreciably over the last six months the following from Reuters suggests that it could actually be in for a  retracement which wouldn’t be good for the Rand:  “It was the worst first half of the year for the US dollar index since 1973 with a lot of that weakness being driven by concerns about trade policy and concerns about a slowing economy,” said Matthew Weller, global head of market research at StoneX. “But I think on a very short-term basis we might be seeing the market get a little bit stretched here and I think there might be a case for a Dollar bounce as we move through July.”
• No local market data today but yesterday our manufacturing PMI was expected to inch up from 43.1 to 44 but it came in at 48.5 which was a decent beat to the upside and points to activity in the sector gaining momentum. 
• Possible USD mid rate trading ranges in the Rand today are R17.50 and R17.80.

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