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

  • Investors sentiment weighed in heavy over the prospects of global economic recovery. The historic economic data reported on Thursday confirmed the enormity of the second-quarter blow suffered by the global economy and the challenging road ahead. It comes when Congress in particular remains divided about how to support relief and reform policies. The longer lawmakers delay, the greater the risk that the stalled economic recovery will lead to a significant spike in unemployment and more business closings that would spread contractionary ripples to the rest of the global economy.
  • China’s factory activity expanded in July for the fifth month in a row and at a faster pace, beating analyst expectations despite disruptions from floods and a resurgence in coronavirus cases around the world.
  • On data front, South African producer price index (PPI) remained subdued on an annual basis in June, as the country continues to feel the effects of the pandemic and the associated lockdown on economic activity.
  • In the US, the economy contracted at its steepest pace since the Great Depression in 2Q20, as the COVID-19 pandemic shattered consumer and business spending.
  • Additionally, the number of people filing for unemployment benefits rose last week, adding to signs that the momentum of economic recovery has slowed, as coronavirus cases spiral out of control.
  • Separately, the US President, Donald Trump, mooted the idea of delaying the November US Presidential election.
  • The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond rose to 7.59%. Further, the yield on 2023 bond declined to 4.82%, while that for the longer-dated 2030 issue advanced to 9.29%.

In early trade on Friday, the US dollar is trading 0.2% lower against the South African rand at R16.7297, while the euro is trading 0.1% higher at R19.8840.  The British pound has gained 0.1% against the South African rand to trade at R21.9656.

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

  • The eurozone’s economic sentiment indicator rose more-than-expected in July, as the government relaxed restrictions related to the COVID-19 pandemic.
  • Germany’s economy contracted at its steepest rate on record in 2Q20 as consumer spending, company investment and exports collapsed.

In early trade on Friday, the euro has advanced 0.3% against the US dollar to trade at $1.1885, while it has gained 0.1% against the British pound to trade at GBP0.9052.





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