LOCKDOWN LEVEL 1 [DAY 14]
TOTAL DAYS 195 – 07 HOURS 30 MINUTES
By the close of trade on Tuesday, the South African rand weakened against the US dollar.
- In the US President Trump stated in a tweet “I’ve instructed representatives to stop negotiating stimulus until after election!” Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. This unexpected announcement killed rallies in EURUSD and USD/JPY and could spark the beginning of a deeper contraction in risk appetite.
- In the US, data showed that trade deficit widened in August. Further, hiring and job openings in the private sector dropped in August, indicating that the US labour market was cooling off as an economic recovery looked to have lost some of its earlier momentum. Meanwhile, in a speech to the National Association of Business Economics, the Federal Reserve (Fed) Chairman, Jerome Powell, reiterated that the US economy needs more fiscal support, even though the recovery from the coronavirus pandemic so far has been strong.
- We’re expecting a bit of controversy from the FOMC minutes due later today. These minutes are from the meeting held back in mid-September. The markets were taken a bit by surprise with dissent following the policy decision. And now we get to have a closer look as to why. One of the key things analysts will be interested in is how much of dissent there was. Especially in regards to the new guidance on interest rates. Two members voted against the initiative, and there is speculation that more members are doubtful.
- Global airlines warned on Tuesday that the coronavirus-stricken industry was on course to burn through another $77 billion in cash in the second half of 2020, calling on governments to renew expiring wage support programmes.
- Back in SA the breaking news this morning is the warrant of arrest that has been issued against ANC Big Wig Ace Magashule. This is a developing story.
- The yield on benchmark government bonds advanced yesterday. The yield on 2026 bond rose to 7.26%. Further, the yield on 2023 bond advanced to 4.54%, while that for the longer-dated 2030 issue climbed to 9.54%.
In early trade on Wednesday, the US dollar is trading 0.4% lower against the South African rand at R16.6766, while the euro is trading 0.4% lower at R19.5544. The British pound has declined 0.3% against the South African rand to trade at R21.4832.
By the close of trade on Tuesday, the euro was mostly higher against most of the major currencies.
- Seasonally adjusted German factory orders unexpectedly advanced on a monthly basis in August.
- The European Central Bank (ECB) President, Christine Lagarde, warned that a second wave of the coronavirus pandemic risks delaying the eurozone’s economic recovery.
In early trade on Wednesday, the euro has marginally slipped against the US dollar to trade at $1.1731, while it has weakened 0.1% against the British pound to trade at GBP0.9106.