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

  • Global risk assets recovered a little from the effects of the coronavirus outbreak.  On Monday, Chinese banks were urged to provide liquidity, the government sent out guidance’s to limit short selling, cut interest rates by 10bp, and injected $175 billion into the banking system. Overnight, the central bank provided even more liquidity through reverse repos and confirmed that the “national team” of state-backed buyers is prepared to buy stocks if necessary.
  • President Trump delivered his SONA saying “In just three short years, we have shattered the mentality of American decline and we have rejected the downsizing of America’s destiny,” Trump said in prepared remarks. “We are moving forward at a pace that was unimaginable just a short time ago, and we are never going back!” Setting a yardstick for success and then contending he’d surpassed it, Trump has gone from an inaugural address that decried “American carnage” to claiming credit for the nation’s economic success. Republican members of Congress applauded nearly every sentence of Trump’s speech, often leaping to their feet to cheer him.
  • In the US, factory orders rose to its highest level since August 2018, in December, boosted by robust demand for defense aircraft, although persistently weak business spending on equipment indicated towards a limited scope for sharp rebound in manufacturing.
  • The yield on benchmark government bonds ended mixed yesterday. The yield on 2021 bond advanced to 6.51% while that for the longer-dated 2030 issue fell to 8.87%.

In early trade on Wednesday, the US dollar is trading 0.3% higher against the South African rand at R14.8245, while the euro is trading 0.2% higher at R16.3589.  The British pound has gained 0.2% against the South African rand to trade at R19.3034.

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

  • The pound is back in the doldrums after reports that Prime Minister Boris Johnson will effectively threaten to walk away from negotiations with the European Union without a formal trade deal.  Sterling fell more than 1% to lead losses among Group-of-10 currencies, wiping out last week’s advance.
  • The Eurozone producer price index (PPI) fell for the fifth consecutive month in December, on account of a decline in energy prices. However, the drop was slower than the previous month.
  • The preliminary reading of Italian consumer price index (CPI) rose on a monthly basis in January.

In early trade on Wednesday morning, the euro has slipped 0.1% against the US dollar to trade at $1.1034, while it has marginally weakened against the British pound to trade at GBP0.8475.

Technical:

ZAR/EUR 16,35 -0.03 (0.20)
ZAR/GBP 19,28 -0.03 (0.14)
ZAR/JPY 0,14 0.00 (0.34)
ZAR/USD 14,81 -0.05 (0.34)