Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE
The Rand and other EM’s are on the front foot this morning as developments across the pond have led to an increase in risk sentiment. The major factor last night was the release of the Fed minutes which suggested that the Fed will be more cautious about their rate hiking path than initially expected.
A key takeaway from the minutes is that the Fed is worried about market disruptions and the real concern of lower than expected global growth. They stated that due to this the Fed can be patient and for the lack of a better word sit on their hands and ride out the uncertainties especially on the back of the low inflation environment the Fed can afford a brief respite. We have also seen Gold surging following the Fed minutes and is within touching distance of $ 1300 per ounce.
There is still some optimism in the market regarding the possible developments in the US-China trade talks. The sentiment flow is quite clear regarding the outcome of the talks, with a resolution being good for EM’s and vice versa.
The momentum is on the side of the EM’s with the Rand looking comfortable in the R13.80’s. We expect some resistance at the R13.80 level and we could expect the Rand to test that level during the day.