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

  • In the US, San Francisco Fed President, Mary Daly, stated that the US economy and policy accommodations are in good place and that she expects inflation to rise back to the Fed’s 2.0% target.
  • The St. Louis Fed Bank President, James Bullard, stated that global trade and other risks remain high for the US economy and that the central bank might choose to provide additional accommodation going forward.
  • The International Monetary Fund (IMF) warned that the US-China trade dispute will slash FY19 global growth to its slowest pace since the 2008-2009 financial crisis, but output would rebound if the tariffs were removed. The IMF, in its latest World Economic Outlook projections slashed 2019 gross domestic product (GDP) growth to 3.0%, down from 3.2% in a July forecast, mainly due to increasing fallout from global trade friction.
  • The yield on benchmark government bonds rose yesterday. The yield on 2020 bond advanced to 6.88% while that for the longer-dated 2026 issue rose to 8.22%.

On Wednesday in early trade, the US dollar is trading 0.2% higher against the South African rand at R14.9240, while the euro is trading 0.2% higher at R16.4625.    The British pound has marginally declined against the South African rand to trade at R19.0347.

On Tuesday, the euro advanced against most of the major currencies.

  • In the eurozone, economic sentiment index fell less-than-expected in October.
  • A separate gauge measuring German economy’s current conditions further dropped in October.
  • In the UK, the Bank of England (BoE) Governor, Mark Carney, stated that the banks will be able to cope with being shut out of currency markets for up to three weeks if Brexit developments trigger big swings in the value of the pound and further indicated that quantitative easing had boosted average household incomes and slashed unemployment.
  • On the Brexit front, European Union officials stated that the Brexit agreement could be reached, if the British government agrees to some concessions.

On Wednesday, the euro has marginally slipped against the US dollar to trade at $1.1031, while it has gained 0.2% against the British pound to trade at GBP0.8648.

Have a great day everyone.