Daily Forex Market Report

Good morning

Excitement seems to be the order of the day as last week we got a preliminary trade deal between the US and China and yesterday we got a Brexit deal between the UK and the EU. But on both we are not out of the woods just yet.

These are the mid rates as at 7:40 today:

USD = 14.83
AUD = 10.13
GBP = 19.07
NZD = 9.45
EUR = 16.50
Brent Crude = $59.83 per barrel

Market News

  • The Rand has had an up and down week as we opened at R14.74 to the Dollar on Monday, traded progressively weaker to hit R15.05 on Wednesday as load shedding started but have since turned things around to touch R14.77 yesterday afternoon. While not quite as exciting as the rugby World Cup quarter finals there is no shortage of interesting developments across the global markets.
  • All eyes were on Boris Johnson and his last ditch attempt to get a Brexit deal agreed with the EU ahead of their conference which started later in the day. Johnson has managed to do what many thought impossible as he clinched a deal at the eleventh hour with the EU agreeing to various changes in the original deal agreed with Theresa May. Johnson however has had to make several concessions himself but this positive development was cheered by global markets.
  • Johnson’s job is only half done as he now has to get his Brexit deal accepted by the UK parliament who meet for a special sitting tomorrow. Theresa May tried to get her deal passed through parliament three times and failed at each attempt, and eventually paid the price by being forced to step down. Johnson is now on the charm offensive trying to convince MP’s that his deal is good for all parts of the UK, and we can expect the Pound to further strengthen against the Rand if he succeeds tomorrow.
  • While decreasing Brexit uncertainty is good for the Rand overall we also managed to deliver some Rand strength from a welcome local development yesterday. After many years of consultation our cabinet finally passed the Integrated Resource Plan (IRP2019) which maps out our energy mix for the next decade with particular emphasis on lessening our exposure to a single source of power (coal / Eskom). The IRP2019 is likely to be gazetted today which paves the way for investment, job creation and above all the first steps to an economy less reliant on Eskom. The Rand strengthened on this news.
  • Poor market data out of China this morning might put short term pressure on the Rand but could be good for us in the longer term. Their GDP print grew at its lowest pace in 30 years as they dropped to 6%, with a forecast of a drop to 5.9% in the forth quarter. With China being a major trading partner of ours this can hurt the Rand but further evidence of the negative effects from the trade war will strengthen the case for them needing to sign a deal.
  • The Dollar was on the back foot last night which helped improve our exchange rate, this as a report from the FED described the US economy’s outlook as cautious. The FED next meets on 30 October and the chances of an interest rate cut are increasing, and this signals Dollar weakness.
  • No local market data today and good luck to the Springboks on Sunday!!!
  • Possible USD mid rate trading ranges in the Rand today are R14.70 and R15.00

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