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

  • Investors sought clarity over Sino-US trade negotiations.
  • US, nonfarm productivity fell in 3Q19.
  • Mortgage applications dipped for the week ended 1 November.
  • The New York Federal Reserve (Fed) President, John Williams, stated that the central bank can achieve its inflation target and it should commit to symmetric inflation targeting, which allows inflation to run above the desired level half the time and below the target half the time.
  • The Chicago Fed President, Charles Evans, stated that the US economy appears quite resilient and that it might not need additional interest rate cuts in future.
  • The Bank of England meet today, and are expected to keep rates on hold with indications that inflation will rise over the coming two years. Since the dissolution of the Parliament, this will be the last meeting for Governor Carney in charge.
  • The yield on benchmark government bonds fell yesterday. The yield on 2020 bond declined to 6.89% while that for the longer-dated 2026 issue fell to 8.40%.

In early trade on Thursday, the US dollar is trading 0.2% higher against the South African rand at R14.8417, while the euro is trading 0.1% higher at R16.4126.   The British pound has gained 0.1% against the South African rand to trade at R19.0619.

Through the course of Wednesday, the euro advanced against most of the major currencies.

  • The strength came on the back of a barrage of stronger than expected data releases.
  • Seasonally adjusted German factory orders rebounded on a monthly basis in September, adding to signs that the euro area economy has passed the worst of its recent troubles.
  • Eurozone retail sales rose more-than-expected on an annual basis in September, pointing to sustained domestic demand in Europe.
  • Services PMI in both the eurozone and Germany rose in October.
  • The International Monetary Fund (IMF) slashed eurozone growth forecast to 1.2% for this year, from the earlier estimate of 1.3% and stated that eurozone economic growth is set to slow more than expected as the bloc’s manufacturing crisis could spill over to the larger services sector under protracted global trade tensions. For 2020 and 2021, it expected growth of 1.4%, down from a previous forecast of 1.5% for both years.

In early trade on Thursday, the euro has slipped 0.1% against the US dollar to trade at $1.1059, while it has marginally gained against the British pound to trade at GBP0.8611

Markets are becoming more concerned that the required reforms needed to stave off a Moody’s downgrade are now getting out of sight . Eskom is looking like it may, again, need to introduce load shedding and the debt levels seem insurmountable and still soaring. With all this the rand will feel the pressure heading deep into November 2019.