Rand Market Update

Good morning

Monday morning has rolled around again, and we’re all gearing up for another 5 days at the grindstone, but not the Rand, as the currency market will enjoy a relaxed day given that it’s a US public holiday.  Never fear however as in two weeks we we’ll get our own long weekend here in SA!!!

These are the mid rates at 7:00 today:

USD = R15.98	AUD = R11.51
GBP = R21.59	DXY = 99.16
EUR = R18.55	Brent Crude = $97.32 per barrel

Market News

• Plenty was going on last week, but most of the market’s focus was on the US jobs report on Friday afternoon, and unfortunately for the Rand, this did not go our way.  But the good news is that the market’s swift reaction was pretty much undone within a short space of time; this is as we jumped from R15.93 to the Dollar to R16.01, only for our exchange rate to settle back at R15.93 an hour or two later.  We’ve slipped a little this morning with us going into the new week at R15.98, and for the third week in a row the market’s attention will be firmly fixed on Friday afternoon as the week’s main event. 
• The FED’s policy announcement on Wednesday the 16^th of September is looming large, which means last Friday’s US jobs report and this Friday’s consumer inflation report have taken on heightened importance.  It looked like the Rand was in a spot of bother then when the jobs report was forecast to show 56 000 new jobs added in August, but the actual number came in far higher at 162 000.  This massive beat to the upside suggests that the FED need not worry about the health of the US labour market at all and therefore strengthened the case for an interest rate hike next Wednesday, sentiment that supported the Dollar.
• A blowout jobs report was good for the Dollar, but the market moves quickly and soon after the event we saw the greenback’s gains being given back for three reasons.  Firstly, a component within the jobs report showed that year-on-year wage growth was the slowest since June 2021 which suggests lower inflationary pressure, secondly, the market was still digesting FED member Christopher Waller’s comments that he’s open to leaving rates unchanged and finally, the elevated oil price means that other central banks around the world could also lift rates to fight inflation which would dampen the effect of a FED hike as it won’t be done in isolation. 
• The following is from Reuters and talks to other central bank activity possibly capping the Dollar’s gains:  The Dollar was on shaky ground on ​Monday despite a ramp-up in US rate hike bets as Middle East tensions raised the prospect of broader inflationary pressures ‌that could force global central banks to tighten policy in tandem. “A hot CPI print would all but seal a September hike and underpin a firmer US Dollar. A cooler reading would strengthen the case for a hold and leave the Dollar vulnerable to a dovish FED repricing,” said Elias Haddad, global head of markets strategy ​at BBH. “Even if a September FED hike becomes a done deal, we doubt the Dollar will make new cyclical ​highs. Tightening by other major central banks limits policy divergence.”
• With the FED now in their self-imposed quiet period, with no interviews or speeches permitted ahead of next week’s announcement, the market will only have Middle East headlines and the all-important US inflation report on Friday to trade on, but with the US closed for Labour Day today, the Rand will probably enjoy a chilled session before getting its week going tomorrow. 
• No local market data today.
• Possible USD mid rate trading ranges in the Rand today are R15.85 and R16.15.

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