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The Rand weakened to its lowest point in 75 days against the Pound, finding a point of resistance around 18.92. This, while the mighty Dollar strength has continued to amaze investors amidst trade talk tensions between the US and China.
The USD/ZAR rate has been creating an
influential channel the last couple of weeks between 15.13 and 15.45, which are
some real low points for the Rand, the like of which we haven’t seen since
mid-2018. With Donald Trump flagging a possibility of a trade deal this past
Monday, only days after both sides of the US-China trade war announced new
tariffs, concerns have grown around the butterfly effect on the global trade
growth based on risk sentiment.
Back on home soil, local data releases saw the core inflation rate come out lower than expected. On Friday, 30 August the balance of trade statistics will be released. This has been met with a dovish forecast and could see the Rand move from its current position.
The Rand is currently sitting at 18.77
against the Pound, but the GBP weakened against major currencies last week
after EU officials saw Boris Johnson’s latest efforts regarding Brexit and the
backstop as frugal at best.
The biggest news of the week is the G7
summit where leaders from around the world come together to address impending
issues such as climate change and equality. A major take away from the summit
was a new international tax law that will be created in order to tax large
corporations that negatively impact the planet.
Market event calendar:
Tuesday 27 August
- USD consumer confidence: Consumer
confidence increased in economic activity.
Wednesday 28 August
- USD Fed speech by Barkin: Expected
to talk about future interest rates.
Thursday 29 August
- RSA PPI YOY (Producer Pricing Index):
Matching market expectation around pricing.
- USD Q2 GDP data release: Forecast
Friday 30 August
- RSA balance of trade: Forecasted
to decrease by ZAR 1.6B.
- EUR Consumer Price Index: Measures
changes in purchasing trends and is forecasted to increase by 1%.