Forex Report – 29 January 2019

CONNECT WITH JODY

The Rand certainly is popping the Champaign this year as according to Bloomberg we are a couple of days away from the best start to a year since 1989!!!

These are the mid rates as at 8:35 today:

USD = R13.66

GBP = R17.97

EUR = R15.62

AUD = R9.79

NZD = R9.36

Brent Crude = $60.42 per barrel

 

Market News

  • We started the week on the back foot thanks mostly to a volatile session in the US equity market. We opened the day at R13.59 but traded progressively weaker to hit R13.70, but have clawed back some of those losses to open at R13.66 this morning.
  • Local financial news outlets are awash with reports that the Rand is making significant strides this year. Bloomberg has released as report that by hitting R13.59 yesterday we had achieved a 5.7% gain against the Dollar which is the second best emerging market currency performance in 2019, and the best January performance for the Rand since 1989. The main reason for this has been the FED throttling back on US interest rate hikes plus trade war tensions easing, but the Rand was also oversold on 2018 and some retracement is aiding our recovery this year.
  • Goldman Sachs are equally positive about the Rand and the following is from Business Day:  The Rand’s flying start to 2019 may be just the beginning, according to Goldman Sachs. The currency is heading for its biggest January gain against the Dollar since Bloomberg started compiling the data. And with expected volatility near an eight-month low, traders are discounting local stumbling blocks in coming months, including a budget speech, ratings review and election. “Concerns about Eskom have been weighing on South African assets, so comments from government officials about a plan to stabilise Eskom have been welcomed by rates and also forex markets,” Goldman Sachs strategists led by Zach Pandl said in a report. “We remain constructive on the currency.”
  • It must be stressed however that while we have had a stellar start to the year the Rand remains at risk to global events, with two playing out right now which could be Rand negative while another two could be Rand positive. On the negative side we have confirmation that the US has announced criminal charges against Chinese tech giant Huawei and is looking to extradite their CFO, and daughter of the founder of Hauwei, from Canada to the States for prosecution. This threatens to derail the vital US vs China trade talks that are taking place this week.
  • The second is the impact of the trade war and a subsequent slowdown in China on emerging market assets. Caterpillar released their worst trading statement since 2011 yesterday citing weak Chinese demand as the culprit, and their share price dropped by 9%. This sent a “risk off” ripple through the market and would have hurt the Rand.
  • But on the positive side the US and Chinese trade talks in Washington this week could help ease concerns about a protracted global slowdown, and the FED is expected to ease their language around further US interest rate hikes tomorrow. Both of these could give the Rand a boost so we will have to wait and see which forces come out on top.
  • Possible USD mid rate trading ranges in the Rand today are R13.50 and R13.80.

 

LOOKING TO INVEST OFFSHORE?

For more information please contact me.

CONNECT WITH JODY

Jody Fabre

Tel: 031 242 5100
Cell: 084 301 7913
Whatsapp: 061 237 9571
Email: JFabre@qfg.co.za
Email: jody@jodyfabre.co.za
Website: www.jodyfabre.co.za

Quattro Offices

390 Ridge Road
Overport
Durban
4001