On Monday by the close of trade, the South African rand weakened against the US dollar.

  • South Africa’s poor economic outlook and ESKOM rolling blackouts again looming larger than before. The Rand is on the backfoot.
  • In the US, Boston Federal Reserve (Fed) Bank President, Eric Rosengren, stated that that the economic outlook for 2020 looks good, as he expects strong labour markets and low inflation to persist.
  • The trade US China trade deal to be signed this week will include pledges by China to buy $200 billion of U.S. goods over a two-year period in four industries, a Trump administration official and two people briefed on the matter said. The target for manufactured goods purchases will be the largest, worth around $75 billion. China will also promise to buy $50 billion worth of energy, $40 billion in agriculture and $35 billion to $40 billion in services
  • The yield on benchmark government bonds ended mixed yesterday. The yield on 2020 bond stood steady at 6.17% while that for the longer-dated 2026 issue rose to 8.26%.

In early trade on Tuesday, the US dollar is trading 0.1% lower against the South African rand at R14.3883, while the euro is trading 0.1% lower at R16.0236. The British pound has declined 0.1% against the South African rand to trade at R18.6924.

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

  • In the UK, data showed that the domestic economy unexpectedly shrank in November, as industrial and manufacturing production declined.
  • Brexit – UK has seen its way to leave the EU.  The House of Commons passed the necessary legislation last week as Tories enjoys a parliamentary majority.  The House of Lords takes up the measures now. Although the Conservatives do not have a majority and a vigorous debate is expected, the unelected body is most unlikely to block Brexit.  
  • What happens next?  The UK will formally exit the EU at the end of the month.  It enters an 11-month standstill phase.  Nothing changes.  The UK and the EU will negotiate their new trade relationship.

In early trade on Tuesday, the euro marginally advanced against the US dollar to trade at $1.1137, while it has marginally gained against the British pound to trade at GBP0.8573.