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

  • The South African Reserve Bank (SARB) announced its decision to keep interest rates on hold and signalled that the next move will likely be higher. The Bank’s monetary policy committee kept the repo rate at 3.5%, while it revised the gross domestic product (GDP) forecast to a contraction of 8.0% in 2020, a slight improvement on the 8.2% prediction during its September meeting.
  • In the US, the number of people filing first-time claims for jobless benefits rose for the week ended 13 November, as new business restrictions to control spiraling COVID-19 infections unleashed a fresh wave of layoffs. Existing home sales increased for a fifth straight month in October, but record-high house prices because of tight supply is likely to slow momentum.
  • Treasury Secretary Steven Mnuchin on Thursday asked the central bank to return money earmarked under the March pandemic relief act for emergency lending to businesses, nonprofits and local governments, marking an end on Dec. 31 to most of the crisis-response programs the Federal Reserve has deemed vital to keeping the economy stable. “I am requesting that the Federal Reserve return the unused funds to the Treasury,” Mnuchin said in a letter to Fed Chair Jerome Powell. “This will allow Congress to re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities.
  • Record low-interest rates in Europe have helped China issue its first negative-yielding government debt in a bond sale aimed at raising $4.7 billion in a three-part deal in euros. China, the first major economy to return to growth from the coronavirus crisis, issued five-year notes at a yield of -0.152%. “Investors placed total orders of about €18 billion.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond climbed to 6.94%. Further, the yield on 2023 bond advanced to 4.19%, while that for the longer-dated 2030 issue rose to 8.81%.

In early trade on Friday, the US dollar is trading marginally lower against the South African rand at R15.4122, while the euro is trading marginally lower at R18.3016.  The British pound has marginally declined against the South African rand to trade at R20.4265.

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

  • On the data front, the eurozone’s construction output dropped on a monthly basis in September.
  • The global economic recovery may be losing momentum as coronavirus infections surge again, the International Monetary Fund has warned. Fund chief Kristalina Georgieva said more economic help is needed, and warned countries against withdrawing aid too soon. Recent progress towards a vaccine has raised hopes of a return to normal. But despite those steps, “the economic path ahead remains difficult and prone to setbacks,” she said. The IMF has predicted the world economy will shrink by 4.4% this year in the worst annual plunge since the 1930s.
  • The British and European Union teams negotiating a post-Brexit trade deal will continue to hold discussions remotely after a member of the EU team tested positive for COVID-19, a British government spokesman said on Thursday. “The UK and EU teams have agreed to continue to negotiate remotely for the time being,” the spokesman said. “The talks will resume in person when it is judged safe to do so. The health and welfare of our staff are our priority.” Earlier in the day chief Brexit negotiators suspended direct talks, but officials continued working remotely to clinch an EU-UK trade deal.

In early trade on Friday, the euro has marginally slipped against the US dollar to trade at $1.1866, while it has marginally gained against the British pound to trade at GBP0.8952.