On Tuesday, the South African rand strengthened against the US dollar.

  • Bolstered by optimism in the US-China trade talks.
  • Meanwhile, leading business indicator fell for the 11th consecutive month on an annual basis in August. In the US, existing home sales fell more-than-expected on a monthly basis in September, as people struggle in finding cheaper homes.
  • Richmond Fed manufacturing rebounded in October due to growth in employment, new orders and shipments. On the trade front, China offered 10.00mn tonnes of tariff-free quota to major Chinese and international soybean crushers to import soybeans from the US.
  • The Moody’s rating is now just 9 days away.  A move stronger in the Rand is on the cards where the unit could test below 14.30.  A potential downgrade could well swing the other way sharply
  • The yield on benchmark government bonds fell yesterday. The yield on 2020 bond declined to 6.86% while that for the longer-dated 2026 issue fell to 8.20%.

In early trade on Wednesday, the US dollar is trading 0.2% higher against the South African rand at R14.6199, while the euro is trading 0.2% higher at R16.2541.  The British pound has marginally gained against the South African rand to trade at R18.7819.

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

  • In the eurozone, banks eased their credit standards in 3Q19 and expect to keep them unchanged in 4Q19 on account of slowdown in economic growth and increasing recession fears. In the UK, British lawmakers voted in favour of the second reading of the legislation for the deal but rejected the government’s proposed timetable for passing legislation to ratify its Brexit deal.

On Wednesday, the euro has slipped 0.1% against the US dollar to trade at $1.1118, while it has gained 0.1% against the British pound to trade at GBP0.8654.

RWC