Forex Report – 21 November 2018

This time last year the Bitcoin frenzy gripped the world’s attention as punters scrambled to join the exponential growth.  But the beleaguered crypto currency has dropped another 30% in the past few days and looks poised to continue its decline.

These are the mid rates as at 8:20 today:

USD = 14.08

GBP = 18.04

EUR = 16.04

AUD = 10.19

NZD = 9.59

Brent Crude = $63.59 per barrel

 

Market News

 

  • Unlike Bitcoin the Rand enjoyed a relatively calm day yesterday.  We opened at R14.09 to the Dollar, had a brief surge to R13.99 followed by an equally brief dip to R14.15 but for most of the day we traded around the R14.10.
  • With very little happening on the local and international scenes the Rand spent yesterday treading water ahead of today’s consumer inflation announcement.  Consensus is now leaning towards the SARB keeping our interest rate on hold tomorrow but if today’s inflation print comes in significantly higher than the forecast of 5.1% then the Rand could get support from more bullish interest rate speculation.
  • While our consumer inflation and interest rate announcements are top of mind there is a sleeping viper lurking in the form of the S&P credit review on Friday.  Various economists have stated that the lack of detail around our land reform process will prevent S&P from surprising us with a downgrade further into junk territory, and Ramaphosa’s progress in addressing economic reforms would further bolster our story.  We will see what happens on Friday but needless to say that a surprise downgrade would be Rand negative.
  • The Dollar is nursing its wounds by once again attracting flows as a safe haven asset.  The global equity selloff resumed yesterday driving investors into the Dollar which has capped the Dollar’s losses following increased speculation on the FED’s rate hiking path.  The Following is from Reuters:  The Dollar traded firm against major peers on Wednesday, extending overnight gains as investors shunned riskier assets in favour of safe haven currencies. With sentiment souring and a global equities rout on Tuesday, risk averse traders sought shelter in the liquid dollar, which climbed from a two-week low hit earlier on Tuesday.  
  • Oil resumed its downward spiral yesterday as Brent crude dropped by 5% to hit an intraday low of $62.27 per barrel.  Its difficult to predict how this will impact the Rand as being a commodity linked currency weakness in oil should correlate with Rand weakness, but lower oil would also translate into lower inflation therefore boosting GDP.   SA motorists will probably just be happy with lower petrol costs which are already predicted to drop by R1.51 in December.
  • Local market data today sees our inflation number at 10:00.
  • Possible USD mid rate trading ranges in the Rand today are R13.90 and R14.20.

 

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