Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
The Rand staged a bit of a recovery yesterday, as President Trump stated that there still could be a trade deal and that the next few weeks could be key in the drafting of the deal. It seemed that calmer heads prevailed after the threat of imposing further tariffs by President Trump on Monday. This about-turn by President Trump has calmed markets and we have seen EM’s clawing back some of the losses it suffered on Monday afternoon, with the Rand testing the low R14.20’s in afternoon trade.
This morning we have seen bad data out of China, with retail figures coming in lower than expected. The Rand had a knee-jerk reaction to the number but has settled in the mid R14.20’s. The Rand seems to be happy at current levels, and will probably need fresh impetus to run lower, but there is significant two-way risk with the US-China trade dispute on the one hand and the South African election story on the other.
Any headline on the trade story will have an impact on the market and the bias seems on the US dollar to strengthen after Trump’s comments yesterday. This could mean that the Rand slides a little today with R14.30 the next possible target.