Sun. Jul 21st, 2019

Early gains offset by the return of international volatility

value of the rand exchange rateResurgence of the US-China trade war and anticipation of the South African cabinet announcement dominated Rand sentiment this past week.

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The week began
with a strong Rand (opening at R18.47 to the Pound and closing at R18.35 on
Monday) due to increased uncertainty in the US and continued Brexit woes.
Donald Trump’s announcement of possible tariffs on European automobile trade
also contributed to the lower sentiment and pushed down both the Euro and the
US Dollar.

By Wednesday,
the Rand started losing most of its previous gains as stability returned to the
US and European markets. The US government announced further trade talks with
China on Wednesday and said it would delay the imposition of tariffs on
automobile trade with the EU. This improved both US and European market
sentiment and strengthened these currencies.

On Thursday, the Rand traded in a narrow band and did not move much for the remainder of the week. A stronger Wall Street and increased volatility in the Pound – due to political issues surrounding Brexit and Theresa May’s potential resignation – weighed on sentiment.

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This week, traders
and investors will focus on the South African cabinet announcement as well as other
notable events and data.

Market event calendar

Tuesday 21 May

  • Speech by US Federal Reserve chairman, Jerome Powell
  • This will allow us to gauge the monetary sentiment of the Federal Reserve Bank.

Wednesday 22 May

  • British inflation data
  • Higher than expected inflation
    will put downward pressure on the Sterling.
  • The South African government cabinet announcement
  • The president is expected to
    reduce the number of ministries and streamline certain functions in order to cut
    costs and reign in expenditure.

Thursday 23 May

  • South Africa interest rate decision
  • An increase will see a
    corresponding (yet slight) increase in the long-term value of the Rand.

Friday 24 May

  • British retail sales data
  • This will impact inflation and will drive sentiment in the stock market.

-Justin Fortuin

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