Thu. Nov 21st, 2019

Turbulent times ahead for the Rand after an upbeat US jobs report

After a great start to the week for the Rand and other emerging currencies, an upbeat US jobs report rallied the greenback, which in turn weighed on the Rand.

turbulent times ahead for the rand after an upbeat us jobs report 1024x683 - Turbulent times ahead for the Rand after an upbeat US jobs report

This Rand report is brought to you by Sable International

The ZAR had previously faced a rough four months due to growing concerns about the domestic economic outlook of the country, a struggling power utility and the scare of a Moody’s downgrade.

The Rand briefly dropped below R14 to the
Dollar last week before news came out that the US had created 224 000 jobs in
June. The US jobs data came in better than expected and initiated a rally for
the US Dollar.

With the South African economic calendar light this week, the Rand will be taking its cues from external catalysts. On Thursday, the country will be releasing its gold, mining and manufacturing production figures. While none of these could have a large impact on the Rand individually, collectively they could cause a short-term shift in its strength.

0316668c 2019 07 09 the rand report - Turbulent times ahead for the Rand after an upbeat US jobs report

Political noise has been a theme for the
Rand this year and it continues after the Gupta Waterkloof landing in 2013 was
placed back in the spotlight. Bruce Koloane, former chief of state protocol,
has been at the centre of allegations over the past two weeks after he
allegedly put pressure on various witnesses to approve the landing of the
private Gupta airplane without proper procedure. Koloane denied any wrongdoing
in the landing of the private airplane.

US Fed chair, Jerome Powell, will be giving
his biannual testimonies to both the US Congress and the Senate on Wednesday
and Thursday respectively. Traders should monitor his speech as he could be
giving hints regarding the rate cut speculation and the Dollar’s valuation.

Market event calendar

Wednesday 10 July

  • UK GDP: After contracting by 0.4%
    in April, expectations are that we will see 0.3% expansion for May.
  • Chinese inflation rate:
    Currently sitting at 2.7%, the Chinese inflation rate is expected to remain the
    same.
  • FOMC minutes: The Federal
    Reserve will be releasing their minutes for their June meeting.

Thursday 11 July

  • US inflation report: The
    inflation rate is expected to drop once more to 1.6% while the core figure is
    largely expected to remain at 2.0%.

Friday 12 July

  • China trade balance, exports and imports: Chinese trade balance is
    expected to have widened to US $45B, while exports are forecasted to have
    fallen by 1.7% and imports by 4.6%.

Dean Reich

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