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

  • Escalating Sino-US tensions and the rise in COVID-19 cases weighed on market sentiment. China is moving to close the US consulate in the southwestern city of Chengdu in retaliation for the forced closure of the Chinese diplomatic facility in Houston on Tuesday.  Washington maintains five consulates on the Chinese mainland – in Guangzhou, Shanghai, Shenyang, Chengdu and Wuhan – as well as a consulate general for Hong Kong and Macau. The closure of the Chengdu facility is expected to escalate tensions between China and the US.
  • On the data front, South African retail sales plunged on an annual basis in May, mirroring the effects of the phased lockdown that has left the country’s embattled consumers and businesses reeling.
  • In the US, existing home sales jumped on a monthly basis in June.
  • US Congressional Democrats and Republicans continue to remain divided on the details of a new stimulus package. In other news, the US ordered China to close its consulate in Houston within 72 hours.
  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.38%. Further, the yield on 2023 bond advanced to 4.80% while that for the longer-dated 2030 issue fell to 9.19%.

In early trade on Thursday, the US dollar is trading 0.1% higher against the South African rand at R16.4945, while the euro is trading marginally higher at R19.0830.  The British pound has marginally declined against the South African rand to trade at R20.9898.

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

  • Meanwhile, the European Central Bank (ECB) President, Christine Lagarde, stated that the historic European Union (EU) deal creating a EUR750.00bn fund “could have been better”. After four days and nights of tough negotiations and many painful compromises, European leaders have reached a deal on a groundbreaking €750 billion ($868 billion) recovery fund. As a gesture of solidarity toward Italy, Spain, and other countries still reeling from the COVID-19 crisis, the agreement is a major step forward for the European Union.
  • On the Brexit front, reports indicated that the UK is close to giving up on a Brexit trade deal, after negotiations with the EU reached a deadlock on various core areas, including fishing rights and the role of the European Court of Justice.
  • The Cabinet Office is seen declaring an end of the Japanese economy’s latest expansion from December 2012, when Prime Minister Shinzo Abe returned to power, it was learned Wednesday. An expert group of the Cabinet Office is likely to date the most recent peak in the business cycle at October 2018. This would mean that the expansion lasted 71 months, the second longest since the end of World War II after the 73-month boom that ended in February 2008.

In early trade on Thursday, the euro has marginally slipped against the US dollar to trade at $1.1569, while it has gained 0.1% against the British pound to trade at GBP0.9091.

South Africa has 572 new Covid-19 related deaths – the biggest spike in a single day – with most fatalities recorded in the Eastern Cape.

The cumulative number of deaths is now 5 940, Health Minister Zweli Mkhize said in a statement on Wednesday night.

The total number of confirmed infections in the country is now 394 948.

The number of recoveries currently stands at 229 175 which translates to a recovery rate of 58%.

The total number of tests conducted to date is 2 585 474.



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