By the close of trade on Wednesday, the South African rand strengthened against the US dollar.

  • Global risk appetite improved on hopes of an economic recovery.  This was tempered with news that Chinese doctors are seeing the coronavirus manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan, suggesting that the pathogen may be changing in unknown ways and complicating efforts to stamp it out. Patients found in the northern provinces of Jilin and Heilongjiang appear to carry the virus for a longer period of time and take longer to recover, as defined by a negative nucleic acid test.   Two studies in monkeys published on Wednesday offer some of the first scientific evidence that surviving COVID-19 may result in immunity from reinfection, a positive sign that vaccines under development may succeed.

 South African retail sales surprisingly advanced on an annual basis in February.

  • In the US, the Fed’s most recent monetary policy meeting minutes revealed that the central bank pledged to act as appropriate to support the economy until it is on track to recovery.  The System Open Market Account (SOMA) manager first discussed developments in financial markets. Financial conditions had shown notable improvement over recent weeks. Equity price indexes were up substantially from the lows of late March, safe-haven demands for the dollar had receded, and measures of realized and implied volatility across markets had diminished.  Forced into record spending by the threat of another Great Depression, policy makers are blurring the lines between borrowing the money they need and simply creating it. Most modern economies have tried to keep the two activities as separate as possible. The typical setup has been for elected politicians to take charge of budgets, and meet any shortfall by borrowing on bond markets –- while the money-printing machinery was walled off in another branch of government, the central bank.
  • U.S. weekly jobless claims are expected to fall to 2.4 million Thursday, taking the total number of unemployment insurance applications since the onset of the Covid-19 pandemic to nearly 40 million. The figure in the Bloomberg forecast would lag the previous week’s nearly 3 million by roughly half a million, falling more quickly than last week’s 195,000 decrease that was the weakest weekly decline since initial claims levels began slowing in April.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.23%. Further, the yield on 2023 bond declined to 4.84% while that for the longer-dated 2030 issue fell to 8.98%.

In early trade on Thursday, the US dollar is trading 0.4% higher against the South African rand at R18.0008, while the euro is trading 0.3% higher at R19.7374.  The British pound has gained 0.1% against the South African rand to trade at R21.9638.

By the close of trade on Wednesday, the euro advanced against most of the major currencies.

  • An agreement was reached on a Franco-German EUR500.00bn coronavirus common fund proposal that boosted expectations that Europe could move closer to a fiscal union.

 On the data front, the eurozone consumer confidence index slightly improved in May. The region’s consumer price index (CPI) slowed on a monthly basis in April.

  • BOE GOV. Bailey has stated that his position on negative rates has changed slightly
  • Today sees the latest release of the au Jibun Bank Flash Japan Composite PMI. Published on a monthly basis approximately one week before final PMI data are released, this makes the PMI the earliest available indicator for private sector operating conditions in Japan.

In early trade on Thursday, the euro has slipped 0.2% against the US dollar to trade at $1.0963, while it has gained 0.2% against the British pound to trade at GBP0.8985

 Below is a link to a very detailed Covid-19 picture giving stats and graphs.