By the close of trading on Tuesday, the South African rand had weakened against the US dollar.

  • South African gross domestic product (GDP) contracted in 3Q19, signaling an urgent need for stringent economic reforms to avoid a further ratings downgrade.
  • In the US, ISM-NY business conditions ticked up in November.
  • On the trade front, the US President, Donald Trump, suggested that a deal with China might have to wait until after the 2020 US Presidential elections and Commerce Secretary, Wilbur Ross, confirmed that new tariffs on Chinese imports would go into effect on 15th December as scheduled, unless substantial progress was made. “That takes off the table something that they may think gives them some leverage. Because once the election occurs — and the president seems to be in very good shape for the election — once it occurs and he’s back in, now that’s no longer a distraction that can detract from our negotiating position,”
  • The yield on benchmark government bonds ended mixed yesterday. The yield on 2020 bond declined to 6.36% while that for the longer-dated 2026 issue rose to 8.47%.

In early morning trade on Wednesday, the US dollar is trading 0.1% higher against the South African rand at R14.6440, while the euro is trading marginally higher at R16.2236.  The British pound has gained 0.1% against the South African rand to trade at R19.0431.

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

  • The eurozone’s producer price index (PPI) fell in line with market expectations on an annual basis in October, pulled down by a sharp decline in energy prices.
  • Separately, France and the European Union announced that they are ready to retaliate if the US imposes a 100.0% tariff on $2.40bn worth of French imports.

In early morning trade on Wednesday, the euro has marginally slipped against the US dollar to trade at $1.1078, while it has weakened 0.1% against the British pound to trade at GBP0.8522.