By the close of trade on Monday, the South African rand weakened against the US dollar even though it was a bank holiday in the USA.

  • The IMF slashed South Africa’s 2020 growth estimates. The IMF warned that structural constraints and deteriorating public finances are holding back business confidence and private investment in the country.
  • News out of Davos is that Macron, Trump agreed on a “truce” on Digital Tax tariffs until the end of the year.
  • The yield on benchmark government bonds ended mixed yesterday. The yield on 2020 bond remained steady at 6.94% while that for the longer-dated 2026 issue fell to 8.14%.

In early trade on Tuesday, the US dollar is trading 0.2% higher against the South African rand at R14.5329, while the euro is trading 0.2% higher at R16.1281.  The British pound has gained 0.3% against the South African rand to trade at R18.9115.

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

  • The German producer price index (PPI) registered a less-than-expected drop on an annual basis in December.
  • Separately, the German Bundesbank stated that there is still no sign of an end to the construction boom. There are indications that manufacturing could stabilise at the start of 2020. The central bank sees German GDP growth at 0.6% for 2019, the slowest growth pace since 2013.
  • In the UK, finance minister, Sajid Javid, added to fears about weak ties between Britain and the European Union (EU), after he stated in a recent interview that Britain would not commit to sticking to EU rules in post-Brexit trade talks.

In early trade on Tuesday morning, the euro has marginally advanced against the US dollar to trade at $1.1097, while it has marginally weakened against the British pound to trade at GBP0.8528.