Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE
It’s only the start of the week, but we are already firmly strapped into the Rand rollercoaster. We saw the local unit lose some ground in evening trade on Friday as the market crept into its shell in anticipation of the meeting between President Trump and his Chinese counterpart. We saw the Rand trading in the high R13.80’s heading into the meeting between the two Presidents.
This morning we have seen the Rand down at the R13.70 level, which indicates that the meeting between the two Presidents went quite well. They agreed to call a truce in the back and forth tariff setting, too allow the two countries to sit down and work through a reasonable plan to stop the trade war. This has buoyed markets and EM’s are on the front foot this morning with momentum firmly on its side.
However, South Africa has some important data out this week, that could either enhance the momentum or stop it dead in its track. The two data sets of interest are the South African GDP out tomorrow and the Current Account balance on Thursday. We saw the last reaction in the Rand when the GDP printed poorly and although the market is expecting a better number than last, and failure in print could see the Rand on the back foot. The weekend news of load shedding will also impact on the Rand should this continue for an extended period as this will have an impact on growth and perk the ears of rating agencies again, and start the snowball rolling.
Internationally, we have a quiet start to the week, but we have Fed Chair Powell testifying before Congress this week and the Us non-farm payroll numbers out on Friday. These events will also give the market direction and we could be in for quite a volatile week.