Today’s market commentary from Andre Botha, Senior Currency Dealer at TreasuryONE:
Walking into the office this morning, after the day of voting yesterday, not a lot has changed in the past 36 hours. The Rand traded all the way to the R14.30 level yesterday as the elections got underway and oscillated between R14.30 and R14.40 for most of the day. The US dollar also traded within in very narrow bands as the market is still awaiting any further news from the US-China trade talks fallout. The EURUSD traded around 1.1200 level for most of the day and to further echo the dull trading day that we saw yesterday the DOW JONES ended up by 0.01%.
With the national election going off without much of a hitch, we expect some of the risks that were priced into the Rand to subside a little and we could see the Rand drifting lower but it needs impetus from offshore for a sustained rally. Looking at early results it seems that the ANC will win the election as expected with around 54-57% of the vote. This will give enough power to the ANC to enact policy reforms and this should be Rand positive.
However, for the Rand to sustain its gains in the medium terms the Rand needs help from the US-China trade deal. The current situation does not help the Rand at all with the trade deal being in limbo and the threat of further tariffs being imposed will in all likelihood negate the election positives and we could see further range-bound trading for the Rand in the short term. Should the Rand break below R14.25 the momentum would change and we could see the Rand trying the R14.00 level.