LOCKDOWN LEVEL 2 [DAY 31]  T-3 to Level 1


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

  • Strength and risk on appetite was the SARB kept repo rate unchanged at 3.5%. However, the central bank revised its gross domestic product (GDP) forecast to a contraction of 8.2% in 2020 from 7.3% predicted earlier.
  • In the US, the number of people filing new claims for unemployment benefits fell last week but remained perched at extremely high levels.
  • The Philadelphia Fed manufacturing index dipped in September, suggesting a slow pace of recovery from the COVID-19 pandemic.
  • Housing starts and building permits dropped in August.
  • Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Iranian cyber threat group Advanced Persistent Threat 39 (APT39), 45 associated individuals, and one front company. Masked behind its front company, Rana Intelligence Computing Company (Rana), the Government of Iran (GOI) employed a years-long malware campaign that targeted Iranian dissidents, journalists, and international companies in the travel sector. Concurrent with OFAC’s action, the U.S. Federal Bureau of Investigation (FBI) released detailed information about APT39 in a public intelligence alert.
  • The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond advanced to 7.16%. Further, the yield on 2023 bond climbed to 4.55%, while that for the longer-dated 2030 issue fell to 9.16%.

In early trade on Friday, the US dollar is trading 0.1% higher against the South African rand at R16.1678, while the euro is trading 0.1% higher at R19.1642.  The British pound has declined 0.1% against the South African rand to trade at R20.9433.

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

  • On the data front, the eurozone’s consumer price index (CPI) fell in August, pulled down by a drop in energy prices.
  • The Bank of England unanimously decided to keep the Bank Rate at 0.1% and the size of its asset purchase facility (APF) unchanged today. The absence of any dovish dissent in favour of an increase in the APF might have come as a surprise to some, but it is consistent with a committee that saw overall slightly less adverse economic developments than it expected in August. Risks, it noted, remain skewed to the downside. Among the positives, the committee noted stronger than expected consumption, and slightly higher inflation.
  • The arrival of Prime Minister Yoshihide Suga is set to allow the central bank to take an even longer-term view on achieving a price goal, which was once seen as a quick two-year mission. By refraining from additional easing even with prices flatlining again, the BOJ showed again at Thursday’s policy meeting that inflation no longer monopolizes its attention as it tries to keep companies afloat and get the economy back on its feet. The BOJ’s stand-pat decision came within hours of the Federal Reserve fleshing out of its ramped-up commitment to inflation and jobs.

In early trade on Friday, the euro has marginally slipped against the US dollar to trade at $1.1848, while it has gained 0.2% against the British pound to trade at GBP0.9151.