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

  • Iran continues to hold centre stage as U.S. intelligence officials increasingly believe that the Ukrainian jet that fell from the sky after taking off from Tehran on Wednesday was shot down by an Iranian based missile.
  • In the US, St. Louis Fed President, James Bullard, stated that the central bank has a “reasonable chance” of achieving a soft landing for the US economy this year, despite geopolitical concerns. He sees trade tensions continuing but believes that businesses have found ways to work the disruptions.
  • The World Bank slashed its 2020 growth forecast for SA from 1.5% to 0.9%, citing an array of overlapping constraints, including persistent policy uncertainty, constrained fiscal space, weak business confidence and poor electricity supply
  • On the contrary, business confidence slightly improved in December, on account of rise in imports.
  • On the data front, the number of Americans applying for unemployment benefits during the week ended 4 January, fell for the fourth week in a row.
  • In SA, local manufacturing data contracted more-than-expected in November.
  • The yield on benchmark government bonds fell yesterday. The yield on 2020 bond declined to 6.19% while that for the longer-dated 2026 issue fell to 8.23%.

In early trade on Friday morning, the US dollar is trading 0.2% higher against the South African rand at R14.2318, while the euro is trading 0.2% higher at R15.8075.  The British pound has gained 0.2% against the South African rand to trade at R18.5986.

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

  • German industrial output rebounded more than expected on a monthly basis in November.  German trade surplus narrowed in November.
  • Eurozone unemployment rate remained steady at its lowest rate since July 2008.
  • The Bank of England (BoE) Governor, Mark Carney, stated that central bank could cut interest rates if it looks like weakness in the economy will persist.
  • On Brexit, UK lawmakers approved legislation to allow Britain to leave the European Union on 31 January with an exit deal, ending more than three years of tumult over the terms of the unprecedented divorce. The outcome was in stark contrast to those that Johnson’s predecessor had become accustomed to before her ousting.  From a British standpoint and for the Pound and UK economy, the best possible outcome is a free trade deal. That would give Britain the same trade terms with the EU that currently exist, pre-Brexit.

From the EU’s perspective, giving Britain such a favorable deal, without significant concessions could be damaging.  There are a number of member states that have eyed a departure from the EU. Britain’s terms could ultimately become a blueprint for future departees…and in there lies the problem that will likely deliver a rocky 11 months ahead for the Pound.

In early trade on Friday, the euro has marginally advanced against the US dollar to trade at $1.1107, while it has marginally gained against the British pound to trade at GBP0.8500.