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

  • Investors looked for a fresh catalyst, with global focus on corporate earnings reports and COVID-19 headlines.
  • China / US tensions soared Monday as The Trump administration escalated its actions against China by stepping squarely into one of the most sensitive regional issues dividing them and rejecting outright nearly all of Beijing’s significant maritime claims in the South China Sea. The administration presented the decision as an attempt to curb China’s increasing assertiveness in the region with a commitment to recognizing international law. But it will almost certainly have the more immediate effect of further infuriating the Chinese, who are already retaliating against numerous U.S. sanctions and other penalties on other matters.
  • China’s dollar-denominated exports and imports rose in June, as restrictions eased and countries started to reopen their economies. The June customs data beat expectations of a decline, with exports posting a rise of 0.5% as compared with a year ago, and imports jumping 2.7% in the same period.
  • In the US, the Federal government incurred the biggest monthly budget deficit in history in June, as spending on programs to combat the coronavirus recession surged, while millions of job losses cut into tax revenues. Separately, the New York Fed Bank President, John Williams, stated that the US economy is showing signs of a turnaround as businesses reopen, but the pace of the recovery is being slowed by large-scale virus outbreaks in some states and it could be years before the economy is back at full strength.
  • U.S. health officials and drug makers expect to start producing potential coronavirus vaccine doses by the end of the summer, a senior administration official said Monday. The U.S. is aiming to deliver 300 million doses of a vaccine for Covid-19 by early 2021.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.70%. Further, the yield on 2023 bond declined to 4.94% while that for the longer-dated 2030 issue fell to 9.43%.

In early trade on Tuesday, the US dollar is trading marginally lower against the South African rand at R16.8501, while the euro is trading 0.1% lower at R19.1094.  The British pound has declined 0.1% against the South African rand to trade at R21.1424.

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

  • On the data front, German wholesale price index rebounded on a monthly basis in June.  Germany’s economy continues to recover following the easing of coronavirus-related restrictions, but remains well below capacity, according to a government report. “The economic recovery is still at the beginning,” the economy ministry said Monday.
  • The Bank of England (BoE) Governor, Andrew Bailey stated that he was under the impression that Britain’s economy was starting to recover. However, it had a long way to go, with the outlook for jobs a particular worry.
  • A measure of Australian business conditions showed a sharp recovery in activity and confidence in June as much of the economy reopened from coronavirus lockdowns, though a fresh outbreak in Melbourne threatens to darken the mood once more.

In early trade on Tuesday, the euro has marginally slipped against the US dollar to trade at $1.1341, while it has marginally gained against the British pound to trade at GBP0.9039.





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