Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
The Rand traded in a very narrow band yesterday only sagging out in late evening trade where it closed the day at R14.2600. The Rand survived a quite volatile day with relation to the Turkish Lira, which had a see-saw day after the Turkish Central Bank kept interest rates at 24%. The fact that the Rand did not react badly to the rollercoaster in Turkey shows that the contagion effect that hounded the markets last year, was not in evidence and was a Turkey only story.
Concerns of global growth raised its head again yesterday as the OECD cut forecasts again for the global economy as they stated that trade disputes and uncertainty over Brexit as the key drivers for lower growth. As soon as uncertainty hit the markets EM currencies are normally hamstrung as there is a flight to safe-haven currencies which could be detrimental for EM’s in the short term.
Today we have the release of the South African Current Account as well as the ECB meeting. The current account has shown a bias to widen in the past couple of readings and should that continue we can expect the Rand to lose a bit of ground. The ECB meeting is key this afternoon as the Euro could come under pressure should Mario Draghi continue with his dovish stance.