By the close of trade on Thursday, the South African rand weakened against the US dollar. The dollar was down on Friday morning in Asia, ending the week by giving up earlier gains. Investors had turned to the safe-haven asset after U.S. markets saw yet another stocks selloff overnight. The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.10% to 93.295

  • Data showed that contraction in South Africa’s mining and manufacturing production decelerated significantly in July, as global demand for commodities picked up in line with the easing of coronavirus-led restrictions in key economies.
  • Goldman Sachs economists said they see third quarter GDP growth tracking at 35%, driven in large part by the surprising strength of consumer spending. Goldman said its tracking forecast is now 14 percentage points ahead of the Wall Street consensus, and it sees the consumer contributing 12 points of that gap. “Following the sharp rise in spending in late spring and early summer, the virus resurgence and the surprise fiscal tightening threatened a reversal. But spending instead rose strongly in July, and four high-frequency measures indicate a further 1-2% increase in real spending in August
  • In the US, the number of people filing new claims for unemployment benefits hovered at high levels last week.
  • Meanwhile, the US producer price index (PPI) rose more-than-expected on a monthly basis in August.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond advanced to 7.24%. Further, the yield on 2023 bond rose to 4.44% and that for the longer-dated 2030 issue climbed to 9.30%.

In early trade on Friday, the US dollar is trading 0.2% lower against the South African rand at R16.8642, while the euro is trading 0.1% lower at R19.9475.  The British pound has declined 0.2% against the South African rand to trade at R21.6125.

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

  • GBP/USD fell to its lowest levels since July 28th on Wednesday, extending losses from the recent yearly high made on September 1st. The same day, the UK government published its Internal Market bill, outlining a plan to breach the pledges in the EU Withdrawal Agreement. However, later in the session the pound recovered as the EU confirmed that it would not give up on efforts to reach a free trade deal.
  • Boris Johnson is facing a potential parliamentary rebellion after angering both Conservative Remainers and Brexiteers by vowing to push ahead with plans to override key elements of the Brexit withdrawal deal. Despite a demand by the EU to drop proposed legislation – and an accompanying threat of legal action from Brussels if the UK does not back down – the prime minister is ploughing ahead with the move to alter key elements of the UK’s Withdrawal Agreement.
  • The European Central Bank (ECB) left the monetary policy unchanged, while reaffirming its plans to leave rates at present or lower levels until inflation rises to converge with its target at 2.0%. Further, the ECB President, Christine Lagarde, stated that the unwelcome strength of the euro was discussed by policy makers, but is not something that the bank targets.
  • The European Union is ready to take further restrictive measures against Turkey if Ankara refuses to engage in a dialogue to ease tensions that flared up after the country sent a survey vessel to map out possible oil and gas drilling in territory also claimed by EU member Greece. In a statement published on Thursday, the Mediterranean littoral members of the EU, gathered for their seventh summit in Corsica, France, said they reiterated their “full support and solidarity with Cyprus and Greece in the face of the repeated infringements on their sovereignty

In early trade on Friday, the euro has advanced 0.2% against the US dollar to trade at $1.1834, while it has gained 0.1% against the British pound to trade at GBP0.9237.