Thu. May 23rd, 2019

The Rand continues to weaken as fuel prices continue to surge

There’s not much in terms of local catalysts this week for the Rand.

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This Rand report is brought to you by Sable International

 With 8 May fast approaching, analysts have warned that it could be a troubling time for the Rand. New data suggest that in an election year, the Rand strengthens in the 30-day lead up to the elections but weakens in the month afterwards.

The Rand has continued to plummet as fuel prices have continued to increase over the past 12 months. An unexpected result in next week’s elections could cause major Rand volatility.

73d27c23 2019 04 30 the rand report - The Rand continues to weaken as fuel prices continue to surge

This week, global sentiment will drive the
Rand with the release of the Canadian and Eurozone GDP. On Tuesday, the
National Treasury will release its budget data for March. Trade talks between the
US and China are set to continue.

Wednesday will see the US Federal Reserve
make their decision on the interest rate after signalling last month that there
will be no increases for the rest of the year. On Thursday, the Bank of England
will announce its decision on the UK’s interest rates.

Friday sees the release of the Eurozone
headline and core inflation rate figures. Volatility across global currency
pairs is expected with the announcement of the non-farm payrolls numbers in the
US.

On 7 May, the Japanese Yen markets are set
to reopen after being closed to mark the Emperor’s abdication. Analysts and
economists have said that a flash crash is not impossible for the Yen after the
3% surge in January following the new year holidays.

Market
event calendar

Tuesday 30 April

  • Canadian GDP: After a couple of weak
    months, Canada will be posting its monthly GDP report. Expectations are that
    the economy has rebounded slightly.
  • Eurozone GDP: The first quarter GDP data
    comes out as the Eurozone struggles with an economic slowdown. The quarterly
    growth has been stuck at 0.2% in the last two quarters of last year and is
    expected to stay in that region for the first quarter of this year.

Wednesday 1 May

  • Fed decision: The Federal Reserve Bank
    will make an announcement on the inflation rates and may shed some light on the
    economy, local and global.

Thursday 2 May

  • UK rate decision: The Bank of England
    Governor will be giving a press conference as the Bank of England is expected
    to keep its interest rate unchanged at 0.75%. However, with all the uncertainty
    surrounding Brexit, the contents of the meeting minutes will be a superb
    indicator of the quarterly inflation rate report.

Friday 3 May

  • Non-farm payrolls: The US jobs report
    will always cause excitement and market volatility. After returning to normal
    in March, the non-farm payrolls are expected to have increased by 190,000
    during April.
  • Eurozone inflation: After confirmation
    of a slowdown in the Eurozone region following the previous set of inflation
    figures, the preliminary data for April comes out on Friday and will give an
    indication of how dovish the central bank is heading.

-Dean Reich

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