We have a risk off mood this morning as Moody’s downgraded Hong Kong from stable to negative and the spread of the Corona virus in China concerns investors in the region. The Hang Seng index is down 2.29% this morning, the Nikkei down 0.96% and the Shanghai down 1.04%. Wall Street was closed for the US holiday yesterday but US futures are trading lower today.
Palladium touched $2 582.18 yesterday but is quoted at $2 528.00 this morning. Palladium is continuing its amazing rally as the market is worried about the supply shortage that still exists. With stricter controls in vehicle manufacturers catalytic converters, the use of palladium and to a lesser extent platinum has shot up. Gold is firmer at $1 567.55 as there is a little bit of safe haven buying as the market is still worried about geo-political tensions.
The Dollar is largely unchanged this morning as it treads water in the absence of any major new drivers and with the US markets closed yesterday. The Dollar is currently quoted at 1.1100 against the Euro and 1.3020 against the Pound. The Rand weakened to 14.5700 levels yesterday but is a trading a touch firmer at 14.5300 this morning. The weakness comes on the back of some local worries surrounding SAA, as it still struggles to find funds to keep afloat. The IMF yesterday lowered its growth forecast for the South African economy in 2020 and 2021 due to structural constraints and worsening public finances.
By Wichard Cilliers, Chief Currency Dealer, TreasuryONE