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

  • 3 rockets make direct hit on the US embassy in Baghdad.  This is a developing story.
  • Meanwhile, in the US, preliminary reading of the manufacturing PMI fell to a 3-month low in January, while the services PMI strengthened to its highest level since last March.
  • On the global front, the WHO declared the coronavirus as an emergency for China but not a global one.
  • The yield on benchmark government bonds fell on Friday. The yield on 2021 bond declined to 6.58% while that for the longer-dated 2026 issue fell to 8.09%.

In early trade on Monday, the US dollar is trading 0.3% higher against the South African rand at R14.4441, while the euro is trading 0.4% higher at R15.9309.  The British pound has gained 0.2% against the South African rand to trade at R18.8583.

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

  • China’s massive financial markets may remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the worsening virus crisis. Panic coursed through the world’s second-largest equity market as investors sold stocks on concern a deadly virus will worsen over China’s week-long trading break.
  • It is widely expected that the Fed will leave the policy rate unchanged at 1.5-1.75% at the January meeting. Major economic data will be released days after the FOMC meeting. Yet, the Fed will likely reiterate that risk to growth is skewed to the downside. There will be no update on economic projections and median dot plot at the meeting. The tone of economic developments since the December meeting has remained more or less the same, characterized by benign inflation and growth.
  • Preliminary reading of eurozone services PMI unexpectedly fell in January.
  • On the contrary, manufacturing PMI rose more than expected during the same period.
  • German private sector gained momentum in January, as growth in services activity picked up and the pullback in manufacturing eased, suggesting that the Europe’s largest economy may be picking up at the start of 2020.
  • The European Central Bank (ECB) President, Christine Lagarde dismissed a recent uptick in euro zone inflation as “really minor” and added that much higher readings would be needed to transform the region.

In early trade on Monday, the euro has marginally advanced against the US dollar to trade at $1.1029, while it has gained 0.2% against the British pound to trade at GBP0.8447.