Fri. Aug 23rd, 2019

Rand buoyed by risk appetite and a weak Pound

This past week saw the ZAR reach its strongest point since February amid Pound weakness and an increase in risk appetite on Wall Street.

rand buoyed by risk appetite and a weak pound 1024x683 - Rand buoyed by risk appetite and a weak Pound

This Rand report is brought to you by Sable International

The ZAR opened at R17.35 and continued to strengthen on Tuesday, breaking the R17.21 mark at noon. This was mainly driven by weakness in the Pound where political uncertainty around Brexit and the election of the new prime minister continues to dominate sentiment. The Pound lost significant ground against the USD on the same day.

The ZAR gained ground against the USD this week as risk appetite revives in Wall Street. The expectation that the Federal Reserve will lower interest rates at the next interest rate decision is the main driver of risk appetite. This dynamic also played out in the stock market as the JSE All Share Index inched up early last week and remained up for most of the week.

bd1c867c 2019 07 23 the rand report - Rand buoyed by risk appetite and a weak Pound

On Thursday, the South African Reserve Bank cut interest rates by 25 basis points. This, and the return of risk appetite in the US, buoyed the JSE. A stronger stock market will strengthen the ZAR in the medium-to-long-term if all else remains equal.

The ZAR closed
at R17.29 to the Pound yesterday and remains flat in early trade today. Traders
will be keeping an eye on this week’s US GDP data, South African inflation data,
credit and money supply data.

Market
event calendar

Tuesday 23
July

  • UK Bank of England Monetary
    Policy Committee meeting minutes

Wednesday 24
July

  • South Africa Inflation Data

Thursday 25
July

  • South Africa Producer Price
    Index 
  • US Durable Goods Order

Friday 26
July

  • US GDP data

Monday 29
July

  • South Africa Private Sector Credit
    (YoY)
  • South Africa M3 Money Supply
    data (YoY)

-Justin Fortuin

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