Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
What an interesting day yesterday was, with the Rand trading like the proverbial yo-yo. The Rand was on the front foot for most of the day after the US inflation number came in worse than expectations. This only solidified the Fed’s position to sit on their hands and adopt a wait an see approach. The last two big data sets out of the US, the non-farm payroll number and the inflation number, came in weaker than expected.
The Rand gave up all of the gains it made in evening trade when Theresa May’s second plan to exit the European Union fell on deaf ears and was overwhelmingly rejected by the British Parliament. She immediately announced another vote for today, on blocking a no-deal exit. A second vote will take place tomorrow to seek an extension to Article 50’s exit process. Should this vote fail, the UK might exit the EU on 29 March with no deal. This uncertainty has spread into the market, and we have seen EM currencies losing some ground and Gold picking up which suggests that the market is nervous heading into tonight vote.
Looking at today we could see the Rand trading sideways as we await the details of tonight’s vote in the UK and little in terms of data will be released. It looks like the markets is a little risk weary which could pin the Rand on the backfoot, but should the no-deal option be voted against tonight we could see the Rand grinding stronger.