The Daily Forex Market Report

Good morning

Whether it was all part of the plan or whether Donald Trump is relenting to market pressure we’ll never know, but the last few trading sessions have seen a couple of much needed concessions.  Not that this is helping the Dollar in any way which the Rand is quite happy about!!!

These are the mid rates at 6:20 today:

Market News

• Things were looking decidedly bleak for the Rand last week as we fell to R19.89 to the Dollar. However, with Trump finally taking his foot off the accelerator, we have been able to bring things back to R19.06 this morning, hopefully with a move back below R19.00 now on the cards.
• After triggering widespread panic with his Liberation Day reciprocal tariffs on the 2^nd of April, we got two significant rollbacks last week, which have eased the pressure on equity markets.  First came Trump’s announcement that all reciprocal tariffs except for those on China would be paused for 90 days, a move that drew huge relief from investors with stocks enjoying one of the biggest up days in history, and then late on Friday he announced a tariff exemption on a wide range of electronic equipment from China.  With large parts of the tech industry going from a complete standstill to now being able to operate almost as normal, this has given the market some much-needed breathing room, but for how long remains the question. 
• Some respite for equities then but no such luck for the Dollar, with analysts suggesting that, for the time being, the Dollar is not enjoying its traditional haven status.  The situation is complicated, but in a nutshell the increasing concerns around the health of the US economy has eroded the US exceptionalism narrative, the FED might have to step in with lower interest rates to prop their economy up which is Dollar negative plus the heightened uncertainty around US policy has driven investors away from US assets and into the Yen, the Franc, the Euro and Gold.  The Dollar Index fell to a three-year low on Friday, and the Rand managed to hit R19.08 in the process. 
• The following is from Reuters:  The Dollar continued to slide against major currencies on Friday as the back-and-forth over import tariffs shook investor confidence in the safety of the greenback, sending it to its lowest level in a decade against the Swiss Franc and a three-year low versus the Euro. “Part of the Dollar weakness in the past few weeks has been linked to worries over a recession or the FED cutting rates, but it’s kind of gone beyond that,” said Win Thin, global head of markets strategy at Brown Brothers Harriman in New York. “It’s more really loss of confidence and credibility in the Dollar and then in US policymaking. Typically in risk-off episodes, the Dollar should gain as a haven, but it’s been the Yen and Swiss Franc that have been picking that up, and the Dollar has been under pressure.”
• On the local front, we are seeing reports of a “constructive” meeting between the ANC and the DA over the weekend, with the contentious VAT hike looking to be done away with.  Tensions within the GNU will no doubt persist for a while but the Rand should react favourably as these tensions cool down and, hopefully, as prospects of the GNU falling apart start to fade.   
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R18.95 and R19.25.

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