By the close of trade on Friday, the South African rand weakened against the US dollar. The Rand crossed over the 15 mark but has retraced in early trade.

  • China’s central bank said it will inject 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday as its stock markets prepare to reopen amid an outbreak of a new coronavirus.  In other CoronaVirus news, up to 2,000 people are stuck on a cruise ship in the South China Sea after it was refused entry to the Philippines because of fears about the coronavirus.  A South African couple are being sought after confirmed cases of the virus were found on a flight they were on out of China.
  • China is back in the markets today, but with possibly 2/3 of the economy still away due to shutdowns and restrictions on travel, it may be a while before there is a return to normality in the world’s second largest economy.
  • South African trade surplus rose more than expected in December.
  • In the US, personal consumption expenditure index rose to its highest level since April, on a monthly basis in December. Consumer spending rose in line with market expectations in December, whereas personal income rose less than expected during the same month, due to decrease in farm proprietors’ income.
  • The Michigan consumer sentiment index increased more than market expectations and within striking distance of a cyclical peak amid strength in the labour market and strong increases in income.
  • The Chicago Purchasing Managers Index fell to the lowest level since December 2015 in January.
  • The Federal Reserve (Fed) Vice Chairman, Richard Clarida, stated that yield curve’s latest inversion pointed to global unease about the coronavirus.
  • The yield on benchmark government bonds fell on Friday. The yield on 2021 bond declined to 6.52% while that for the longer-dated 2026 issue fell to 8.02%.

In early trade on Monday morning, the US dollar is trading 0.4% lower against the South African rand at R14.9744, while the euro is trading 0.4% lower at R16.5936.  The British pound has declined 0.6% against the South African rand to trade at R19.7050.

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

  • Despite last week’s safe haven demand and signs of resilience in US data, the British Pound to US Dollar exchange rate ultimately avoided losses and spent the late-week climbing higher. Market optimism around the Bank of England (BoE) outlook, combined with Brexit anticipation, kept the Pound appealing.
  • Meanwhile, in the Eurozone, the seasonally adjusted gross domestic product (GDP) rose less than market expectations in 4Q19, while inflation in January picked up in line with expectations due to a jump in prices of food, alcohol and tobacco and energy.
  • German retail sales fell more than expected on a monthly basis in December, suggesting that private consumption in Europe’s biggest economy had run out of steam in the final month of last year.

In early trade on Monday, the euro has slipped 0.1% against the US dollar to trade at $1.1082, while it has gained 0.3% against the British pound to trade at GBP0.8421.