Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
The Rand traded sideways for most of yesterday as it traded in a 15 cent range for the day, as the market took stock from the latest trade talk developments between the US and China. While the overall news as positive for EM, President Trump has decided to take aim at India and Turkey in an effort to end preferential trade agreements with them. This negative could spill into the Emerging Market pool and we could be in for a bit EM selling on the back of the latest developments.
We have also seen the US dollar on the front foot and Gold starting to lose some of its sparkle, which seems to suggest that the market is currently not convinced by the Fed’s dovish stance and Fridays’ non-farm payroll number could provide further doubt. The scales are firmly tipped in a weaker Rand for the short term until we have a concrete trade deal between US and China.
Today we have the South African GDP number, which could affect the Rand should the number surprise to the upside/downside. The feeling, however, is that the major Rand directional sentiment lies with the US dollar at the moment and the feeling is that risk appetite is slowly starting to wane.