Rand Report 19/04/2021
Good morning
Heavy scenes from Ronderbosch as the 200 year old Jagger Library at the University of Cape Town was engulfed in flames yesterday. Hopefully the rest of the campus can be saved.
These are the mid rates as at 7:25 today:
USD = R14.27
AUD = R11.03
GBP = R19.78
DXY = 91.62
EUR = R17.07
Brent Crude = $66.59 per barrel
Market News:
Despite slipping in Friday’s session the Rand still managed to post a 2.2% weekly gain against the Dollar which is an impressive move when considering that Rand strength was in the mix along with Dollar weakness. We closed the week at R14.31 and have jumped to R14.27 this morning.
Analysts are putting Friday’s blip down to local importers finally waking up and rushing to book trades at exchange rates not seen since January 2020, and the resultant selling of Rands pushed us weaker. Earlier in the day we saw unbelievably strong market data from China as their Q1 2021 GDP growth came in at 18.3%, and with the world’s second largest economy on an absolute tear that bodes well for commodity linked currencies like the Rand.
The following is from Business Day and talks to how various international factors could keep the Rand well bid: “The impressive [Chinese] data came hot on the heels of blowout US retail sales figures, strong jobless claims numbers and a solid start to US earnings season. Upbeat earnings in Europe are adding to the buoyant mood,” said Oanda market analyst Sophie Griffiths. “We have seen factors really line up, pointing to a robust economic recovery. At the same time, the US FED has reiterated its supportive stance and yields have declined across the week. This is a setup that favours further gains.”
The end of March saw a spike in US bond yields drive their 10 year treasury to 1.77% which supported the Dollar and hurt the Rand. It was painful at the time but with their 10 year yield now in a downward spiral as it touched 1.52% last week that has seen the Dollar sell off, and has helped set the scene for further Rand gains.
The following is from CNBC and suggests more Dollar weakness thanks to falling bond yields and rising US equities: The Dollar was pinned near a one-month low to major peers on Monday, with Treasury yields hovering near the lowest in five weeks after the US FED reiterated its view that any spike in inflation was likely to be temporary. “The fixed income market will dominate my world this week, with the risk currently skewed to further yield declines, pressuring the Dollar,” Chris Weston, head of research at Pepperstone Markets Ltd wrote in a client note. Wall Street’s gains amid low volatility “should keep USD rallies contained and attract further USD sellers.”
No local market data today and we get our consumer and producer inflation prints on Wednesday and Thursday respectively in an otherwise quiet local week.
Possible USD mid rate trading ranges in the Rand today are R14.10 and R14.40.
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