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

  • Investors mulled the medium-term budget policy statement and a possible second wave of COVID-19 infections hangs high over the South African landscape.  As the US presidential race enters its final stretch, markets are laser-focused on the outcome, with the correlation between the stock market and opinion polls shooting up lately. The race has tightened substantially, with Trump overtaking Biden in the crucial state of Florida, so a sweeping Democratic victory that delivers king-sized stimulus packages is no longer quite as likely.
  • The greenback gained ground, following the release of robust economic data.
  • The US economy grew at a historic pace in 3Q20, as the government injected more than $3.00tn worth of pandemic relief, which fueled consumer spending.
  • The number of people filing for unemployment benefits fell to the lowest level during the pandemic for the week ended 24 October.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.13%. Further, the yield on 2023 bond declined to 4.25%, while that for the longer-dated 2030 issue dropped to 9.26%.

In early trade on Friday, the US dollar is trading lower against the South African rand at R16.3324, while the euro is trading lower at R19.1009.   The British pound has declined against the South African rand to trade at R21.1348.

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

  • German Chancellor Angela Merkel delivered a wake-up call to the European Union by saying its member countries should have acted earlier to control the coronavirus, which is now surging on the continent, according to officials familiar with her comments. Merkel, speaking to her 26 EU counterparts by video conference on Thursday, said that political realities kept them from imposing restrictions earlier, and that they would have to draw lessons from the current situation and act faster,
  • The European Central Bank (ECB) hinted at further monetary policy easing in December. The central bank kept the key interest rates steady and committed on to contain the growing fallout from a second wave of coronavirus infections, saying it would hone its response by its December meeting.
  • On the data front, a five month recovery of sentiment in the eurozone stalled in October.
  • Further, German unemployment rate fell in October and demand for job protection schemes kept declining. Also, the country’s consumer prices rebounded on a monthly basis in October.
  • The jobless rate in Japan stood at 3.0% in September, unchanged from August, data from the Statistics Bureau showed on Friday, in the latest sign of an uneven recovery from the coronavirus crisis. The September reading is the highest since 3.1% in May 2017, indicating that a manufacturing-led recovery in recent months has not been enough to resolve unemployment caused by the pandemic. The challenge was underlined by the Bank of Japan on Thursday.

In early trade on Friday, the euro advanced against the US dollar to trade at $1.1689, while it has gained against the British pound to trade at GBP0.9038.