Back to school across the country amid rumors of longer blackouts does not bode well!

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

  • Breaking news reports that Rockets hit Iraqi Taji base, hosting American soldiers.  No news of casualties available [This is a developing story]
  • In the US, consumer price index (CPI) rose less-than-expected on a monthly basis in December.
  • On an annual basis, CPI advanced at the fastest pace in eight years, driven by increase in prices for gasoline, healthcare and rent.
  • The NFIB small business optimism index declined more-than-expected in December.
  • The Kansas City Federal Reserve (Fed) President, Esther George, stated that the central bank might have to take back the three interest rate cuts made last year, if trends holding down growth eases.
  • On the trade front, China is set to purchase an additional $80.00bn worth of manufactured goods from the US in the next two years. Meanwhile, the US has now removed China from the list of countries that it considers to be currency manipulators. Under the Phase 1 trade deal to be signed on Wednesday in Washington, China would also buy over $50 billion more in energy supplies and boost purchases of U.S. services by about $35 billion over the same period.   In total, China pledged to buy $200 billion more in U.S. goods and services over the next two years, while Washington suspended some tariffs that had been due to go into effect and halved others. U.S. duties remain in effect on $360 billion of Chinese imports, about two thirds of the total.
  • China’s yuan weakened on Tuesday and the Japanese yen reversed earlier losses after a report that the United States will keep tariffs on Chinese goods through the U.S. election hurt risk sentiment. The news came a day before the signing of a preliminary U.S.-China trade agreement to ease an 18-month-old trade war.
  • The yield on benchmark government bonds ended mixed yesterday. The yield on 2020 bond advanced to 6.94% while that for the longer-dated 2026 issue fell to 8.25%.

In early trade on Wednesday, the US dollar is trading marginally higher against the South African rand at R14.4090, while the euro is trading 0.1% higher at R16.0388.  The British pound has gained 0.1% against the South African rand to trade at R18.7687.

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

  • Meanwhile, European Central Bank (ECB) board member, Yves Mersch, stated that the eurozone growth and inflation appears to be stabilizing after a big drop last year and that it could prompt the ECB to discuss its risk assessment, debating whether growth risks were still skewed to the downside or whether they were now more balanced.

In early trade on Wednesday, the euro has marginally advanced against the US dollar to trade at $1.1130, while it has marginally weakened against the British pound to trade at GBP0.8545.