Rand Holds Below R16 as Markets Await Warsh Speech

Good morning

Nvidia’s quarterly earnings report was nothing short of stellar, with jaw-dropping figures from start to finish, but there’s one little-known stat about the company that’s just as mind-blowing.  42 000 people work at Nvidia, and thanks to their internal share reward program 78% of their staff are now Dollar millionaires.   

These are the mid rates at 5:40 today:

USD = R15.98	AUD = R11.51
GBP = R21.73	DXY = 99.15
EUR = R18.62	Brent Crude = $88.20 per barrel

Market News

• Compared to the Nvidia report, keeping track of moves in the currency market has been like watching paint dry this week, this as we go into the final session at R15.98 to the Dollar, marginally below Monday’s open of R16.00, but drifting higher from Wednesday’s best level of R15.90.  But the week is far from over, with the Rand still needing to clear the biggest hurdle at 4 pm this afternoon.   
• The stars aligned for the Rand over the past week or so, which helped us break below R16.00, this as US Treasury Secretary Scott Bessent triggered a Dollar selloff when he announced that his department would double its treasury buyback program for a few months, and then we heard of a significantly over-subscribed local government bond auction, which delivered a spot of Rand strength.  But with FED Chair Kevin Warsh’s keynote address at the Jackson Hole symposium looming large, the currency market has shifted into wait-and-see mode with very little movement ahead of this major event. 
• Currency movements have been muted but not because there has been a lack of economic data to digest.  The FED’s preferred inflation gauge came in slightly hotter than expected on Wednesday, but personal income levels rose faster than inflation, capital goods orders surged, and corporate profits in Q2 have risen at the second fastest pace on record.  All of this points to a roaring US economy with its Q3 GDP rate likely to accelerate to 3%, a scenario that would normally see the market start pricing in FED policy tightening to rein in inflation (Dollar positive), but with Warsh’s speech coming later today, the market has remained on the sidelines. 
• The following rather colourful excerpt from CNBC talks to the Dollar not reacting to strong US data as it normally would while also warning that the greenback is exposed to comments from Warsh:  The Dollar was little changed on Thursday after a round of economic data, while attention began to shift toward a speech by ​FED Chair Kevin Warsh at the ​Jackson Hole symposium. “I’m surprised the Dollar’s not a bit stronger actually. The FX market, honestly, is in a bit of a trance,” said Erik Bregar, director of FX at Silver Gold Bull in Toronto. “Warsh is saying the FED needs to speak less so that the price signals from the bond market are cleaner, and then Bessent wants to distort those signals by intervening; it makes no sense. So that’s why it’s even more important for Warsh to set the record straight on Friday, because ⁠if he doesn’t, the Dollar could actually puke.”
• Tensions in the Middle East rumble on with the US reportedly uninterested in Iran’s proposal to return to the terms of the June memorandum of understanding, but failing a major flare-up today, the market’s attention will be fully focused on Kevin Warsh with little else having the ability to move the dial. 
• Local market data today sees our balance of trade at 2 pm.
• Possible USD mid rate trading ranges in the Rand today are R15.90 and R16.20.

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