Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE
Despite the good GDP number, the Rand closed yesterday in the R13.80’s after reaching a low of R13.55 just after the release of the GDP number. The primary driver of the Rand sell-off was out of the US with equities getting hammered with the Dow Jones index closing the day down 3%.
Such a hammering in equities is normally equated in the market turning risk averse and with that comes the inevitable slide of risky assets where the Rand finds itself. The sell-off in equities has caused the market to run back to the US dollar and we have seen dollar firming close to the 1.1300 level after trading comfortably over the 1.1400 level yesterday.
Other factors that have caused the market to move yesterday was Theresa May’s debate defeat in the UK Parliament which caused the Pound and the Euro to lose ground. In local news, Parliament has adopted the land expropriation without compensation bill and Eskom has continued with load shedding and could have a more significant effect on the market the longer both issues drag on.
Today we expect the Rand to be on the back foot still, but there is a sigh of relief with the US markets being out of action as a mark of respect for the funeral of former President George Bush. This could keep the Rand range bound for the day.