CURRENCY PATROL LOCKDOWN DAY 48 07 HRS & 14 MIN
By the close of business on Wednesday, the South African rand weakened against the US dollar.
- In South Africa, President Ramaphosa addressed the nation on Wednesday evening. A long winding speech yielded little to no result and in essence told the Nation that the National Command Council will begin consultations on an easing and move to stage 3 in certain parts of the country. A few metros would remain on their current 4 lockdowns due to continued spreading of the covid-19.
- Investors expressed concerns about easing lockdown restrictions prematurely.
- Escalating tensions between US and China on who is responsible for the outbreak of COVID-19 will not just push the Chinese yuan lower, but could also spark a major devaluation across numerous major currencies, analysts warn. The US dollar to yuan exchange rate has fallen about 0.5% since end of April when US President Donald Trump said there was a “high degree of confidence” that the virus originated from the Wuhan Institute of Virology.
- In the US, Fed Chairman, Jerome Powell, warned of an extended period of weak economic growth, vowed to use the central bank’s power as needed. Powell made two things clear during much-anticipated remarks on Wednesday. First, fiscal policy might need to do more to combat the lasting economic damage from the coronavirus pandemic. Second — in what markets were most eager to hear — he’s not about to steer the central bank down the path to negative interest rates.
- Maersk, the world’s biggest shipping company, expects volumes across all businesses to contract as much as 25% in the second quarter as coronavirus has battered global trade.
- On the data front, producer price index (PPI) fell to its lowest level since 2009 on a monthly basis in April, as the novel coronavirus depresses demand.
- Goldman Sachs now thinks second quarter gross domestic product will decline 39%, and increased its peak unemployment rate estimate to 25% from 15%, after accounting for first quarter GDP, April employment data, and insights from big data sources.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.84%. Further, the yield on 2023 bond advanced to 5.27% while that for the longer-dated 2030 issue rose to 9.42%.
In early trade on Thursday, the US dollar is trading 0.1% higher against the South African rand at R18.5250, while the euro is trading 0.1% higher at R20.0349. The British pound has marginally declined against the South African rand to trade at R22.6293.
By the close of trade on Wednesday, the euro declined against most of the major currencies.
- The European Central Bank (ECB) Vice President, Luis de Guindos, stated that the eurozone has hit the low point of its virus-triggered economic slump though the path of recovery remains highly uncertain.
- On the data front, the seasonally adjusted industrial production in the eurozone suffered its steepest monthly fall on record in March, as coronavirus containment measures severely hit activity across the single currency area.
- In the UK, gross domestic product (GDP) dropped to its lowest level since 1997, as lockdown measures began to hammer economic activity in the country.
- The UK government has been urged to provide measures to help the property market to recover, after the latest research warned that UK house prices are set to plunge this year.
In early trade on Thursday, the euro has marginally slipped against the US dollar to trade at $1.0814, while it has gained 0.1% against the British pound to trade at GBP0.8853.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.