Sun. Oct 20th, 2019

Rand remains volatile ahead of elections

Another Brexit extension, oil prices continue to rise, and uncertainty still surrounds Eskom.

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This Rand report is brought to you by Sable International

The Rand has been clinging to offshore
support to keep its head above water following sluggish economic performance after
electricity outages in the first quarter. Along with an uncertain outcome in
the national elections in May and rising fuel prices, the Rand looks like its
volatile self.

We can look forward to some domestic data releases with the consumer inflation data for March and retail sales numbers for February – both set to be released on Wednesday. On the same day, the Chinese GDP numbers are due for the first quarter. These numbers are going to be watched closely due to growing concern that the global economy is slowing.

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Investors and traders alike are expecting
muted movements in the Rand and global currencies in general with volumes being
dampened by a string of shortened trading weeks starting with Easter Friday.
Locally, motorists are being put under more pressure with talks of another
spike in fuel prices thanks to the oil price staying above $70/barrel.

Although it is near impossible to keep up
with the slew of news, numbers, compromises, cross-party talks and multiple
meaningful votes coming out of the UK parliament, the EU have granted the UK a six-month
extension to Brexit. The date is now set for 31 October – leaving Brexit back
at the drawing board.

Market event

Tuesday 16 April

  • UK jobs report: Despite Brexit, the UK
    labour market is still doing quite well – the unemployment rate is expected to
    remain at 3.9% from January. The claimant count is expected to rise by 17.3k
    after disappointing results in January. Wages take centre stage as they are
    projected to move to 3.5% from 3.4% in January.

Wednesday 17 April

  • China GDP: China recorded their second
    lowest growth rate last year at 6.6%, the predictions are that the GDP is to
    come in at 6.3%.
  • SA inflation rate and retail sales:
    Retail sales looked to have dropped in February following uncertainties
    surrounding the national power utility, but the inflation rate is set to rise somewhere
    between 4.4% and 4.6%.

Thursday 18 April

  • US retail sales: After falling in
    December then bouncing back in January, US retail sales are projected to
    increase to 0.7% in both the headline and core sales.
  • UK retail sales: After a surprising
    increase of 0.4% in February, predictions are that data publishing is expected
    to slide by 0.3% – uncertainty surrounding Brexit being the main cause.

Friday 19 April

  • US building permits and housing starts:
    Good Friday sees US building permits and housing starts released. Both are
    expected to rise slightly but should not have much impact on the currency

-Dean Reich

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