Daily Market Report
Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
While we were enjoying our day off yesterday the market was very active and where the Rand is trading could come as a surprise to some people when walking into the office this morning. The Rand has nearly lost 20 cents from where we were when we left the offices on the 30th of April. The reason for the sudden depreciation in the Rand was due to the Fed coming out last night and sounding not as dovish as the market expected.
Chairman Powell stated that the Fed sees no scope in changing the interest rate either upward or downward and that the Us economy is heading on a stable path. This neutral tone caught the market off guard, as the market expected the Fed to keep going with its dovish commentary and possibly inching toward a rate cut in the not too distant future. The fact that the Fed gave no credence to the market belief that the next move will be a cut, caused EM currencies to wobble a little and with the thin market conditions, we saw the Rand at the forefront of the weakening.
This morning we have seen the Rand carry on with the momentum of the last evening and looking to test the R14.5000 level. We expect the Rand to run into some resistance at the R14.5000 level and settle in the mid R14.40’s. However, we are in the final stretches of the election process and the market will be on tenterhooks for any headlines that could cause the Rand to wobble some more.
After the Fed announcement, the main global event left for the week is the US non-farm payroll numbers which will be released tomorrow which could give new momentum to the market.
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