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

  • It was supposed to be a day of de-escalation, so when Bloomberg, Sky News Arabia, Fox News and other sources reported that “several rockets” have hit the Green Zone in Baghdad and explosions have been heard early during the night. Iraqi military are reporting two Katyusha rockets fell inside the green zone.  There are no reported casualties.
  • Global financial markets shrugged off U.S.-Iran tensions because they are not expected to escalate into a larger military conflict or seriously impact the global economy — at least for now.
  • The Absa manufacturing PMI declined less-than-expected in December.
  • In the US, ADP private payrolls increased by the most in eight months in December, signaling a sustained labour market strength.
  • The yield on benchmark government bonds fell yesterday. The yield on 2020 bond declined to 6.61% while that for the longer-dated 2026 issue fell to 8.23%.

In early trade on Thursday morning, the US dollar is trading marginally lower against the South African rand at R14.1604, while the euro is trading 0.1% higher at R15.7378.  The British pound has gained 0.1% against the South African rand to trade at R18.5592.

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

  • German factory orders unexpectedly dropped on a monthly basis in November, due to weak foreign demand and a lack of major contracts.
  • The eurozone business climate and consumer confidence index further deteriorated in December.
  • Economic sentiment improved in December, driven by optimism in Italy and Spain and amid growing confidence in the services sector.
  • The European Commission Chief, Ursula von der Leyen, hinted that Britain could crash out of the European Union without a deal by the end of 2020, as she stated that there was not enough time before the end of the year to agree on a full trade agreement with Westminster. Von der Leyen marked out her red lines, warning the UK to stick closely to EU rules if it wanted to arrive at a far-reaching trade deal with the EU. A level playing field is what the EU are looking for. Time will tell whether it is what Boris Johnson is prepared to offer. The pound remains under pressure as doubt exists whether 1 year will be sufficient time to agree a deal.

In early trade on Thursday, the euro has advanced 0.1% against the US dollar to trade at $1.1115, while it has marginally weakened against the British pound to trade at GBP0.8480.