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

In early trade on Tuesday, the US dollar is trading marginally higher against the South African rand at R16.7493, while the euro is trading 0.1% lower at R19.7682.  The British pound has declined 0.2% against the South African rand to trade at R22.0016.

  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond dropped to 7.26%. Further, the yield on 2023 bond declined to 4.46%, while that for the longer-dated 2030 issue fell to 9.17%.
  • The USDZAR pair was higher on the day as traders await second quarter GDP from South Africa. Investors are nervous that the economy could show deep losses after strict lockdowns and the recent Eskom power cuts. Analyst expectations for the GDP number are for a huge drop of -47.3% from the first quarter. The economy is expected to see a drop of 16.5% on the year. The number will give some insight into the current state of the country’s budget, which some see as unsustainable. The Rand has been supported recently by a rise in inflation to 3.2% in July.
  • Gold was down on Tuesday morning in Asia as the U.S. dollar rose, however, its fall was lessened by the continuing COVID-19 uncertainty. Gold futures edged down 0.14% to $1,931.45 by 12:37 AM ET (5:37 AM GMT) after a peak of $1,945.90 the previous day and looked likely to continue falling. The fall appears to be due to the stronger dollar, which rose as traders anticipate the European Central Bank’s latest policy decisions, due Thursday, and digested heightened concerns over the pound due to new Brexit uncertainties after a combative statement from U.K. Prime Minister Boris Johnson.
  • Japan’s economy shrank slightly more than initially thought in the April-June quarter, official data released Tuesday showed, deepening a contraction that was already the worst in the nation’s modern history. The world’s third-largest economy shrank 7.9% in the second quarter of this year from the previous quarter, more than the initial 7.8% in the preliminary data, the Cabinet Office said. The downward revision comes with corporate investment weaker than in the preliminary data released last month, as the coronavirus deepens the country’s economic woes.

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

  • Investor morale improved for a fifth consecutive month in September to reach its highest level since February, signalling towards hope that a recovery from the coronavirus crisis remains on track.
  • On the contrary, Germany’s seasonally adjusted industrial production rose far less-than-expected on a monthly basis in July, suggesting that Europe’s largest economy faces a slow return to production levels that preceded the crisis unleashed by the coronavirus pandemic.

In early morning trade on Tuesday, the euro has slipped 0.1% against the US dollar to trade at $1.1806, while it has gained 0.1% against the British pound to trade at GBP0.8980.

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