Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
We did see the Rand on a gallop higher in the latter part of last week after the ECB meeting and the momentum looked like the Rand will continue on its merry way. However, the Rand had a little reprieve on Friday with worse than expected Non-Farm Payroll number out of the US, where the US only added 20k jobs vs the expected 180k. This caused a brief halt in the weakening of EM’s and the US dollar closed at R14.4300 after spending much of the day, north of the R14.50’s.
The news out of China has also been uninspiring, to say the least, with growth being revised downward and trade numbers coming out weaker than expected. This will keep EM’s on the back foot and places more emphasis on the ongoing US-China trade talks to reach some kind of agreement. With bad US data and bad EM data, we can expect the Rand to move between “risk-on” and “risk-off” with regularity and we could see the Rand being volatile in the short term.
On key economic event will be Theresa May’s Brexit vote that happens tomorrow, and this vote will give us a clear indication on how Britain will proceed with their Brexit plans. Only three options exist, with Britain either exiting on 29 March, no exit or a delay, with the smart money being on a delay and kicking the can further down the road.
This week we have a full data release schedule with mostly second-tier data, with the US retail sales enjoying top billing. Once again more weight will be given to the Brexit vote and US-China trade talks and there is some risk to headlines driving the market.