By the close of trade on Friday, the South African rand weakened against the US dollar.  The rand slumped to its weakest level in almost five years after stock markets plunged around Asia on Monday, as panic selling set in with traders fretting over the economic impact of the new coronavirus and digesting a free-fall in the oil price in the OPEC – Russia fallout.

  • Moody’s Investors Service slashed its expectations of SA’s growth, due to the spread of the coronavirus. The ratings agency lowered its forecast for SA growth to 0.4%, down from 0.7%, in the wake of the disease’s spread.
  • Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia. The world’s largest oil exporter started a price war on Saturday by slashing the prices it sells crude into foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the U.S. to entice refiners to purchase Saudi crude at the expense of other suppliers.  The collateral effects have resulted in an absolutely epic hammering of Oil towards the $30.00 mark.
  • In the US, nonfarm payrolls rose far more-than-expected in February, with a healthy labour market despite the coronavirus outbreak.
  • Trade deficit narrowed more than expected in January as imports declined.
  • Further, unemployment rate fell to its lowest level in 50 years.
  • The Boston Federal Reserve (Fed) President, Eric Rosengren, stated that the Fed should be allowed to purchase a broader range of securities and assets if the coronavirus outbreak forces the US central bank to launch a new round of big asset purchases to stimulate the economy.
  • The yield on benchmark government bonds rose on Friday. The yield on 2021 bond advanced to 6.08% while that for the longer-dated 2030 issue rose to 9.02%.

In early trade on Monday, the US dollar is trading 2.9% higher against the South African rand at R16.1327, while the euro is trading 4.1% higher at R18.4030. At The British pound has gained 3.2% against the South African rand to trade at R21.1055.

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

  • The German industrial orders increased to its highest level since July 2014, in January, on bumper aerospace and mechanical engineering bookings, giving the manufacturing sector a big boost at the start of a quarter marred by the coronavirus.
  • The Italian government will adopt new tough measures to try to contain the spread of coronavirus, including telling people not to enter or leave the hardest-hit region of Lombardy, according to a draft decree seen by Reuters. So far only a few limited areas of northern Italy, known as “red zones”, have been quarantined, but in a dramatic escalation the draft tells people not to enter or leave Lombardy or 11 provinces in other regions.

In early trade on Monday, the euro has advanced 1.1% against the US dollar to trade at $1.1413, while it has gained 0.9% against the British pound to trade at GBP0.8728.

It is not going to be pretty, there is a lot to digest, including insane volatility in the Forex market.