JOHANNESBURG– The rand had a bit of a reprieve on Friday with the US dollar coming under pressure and could continue to be under pressure should the calls for a cut in the US interest rate become louder.
Andre Botha, Senior Dealer at TreasuryONE said the rand was in for a volatile week.
The rand was trading at R14,55 to the greenback by 11:04 on Monday.
“The current narrative in the market apart from the trade war stories is the fact the market is imploring the Fed to cut rates in the medium term in order to avert the latest round of global growth concerns…
“Furthermore, Trump has now got Mexico and India in his tariff sights. [This] has only reinforced the pessimistic outlook for global growth and it is only a matter of time before the recession debate hits the news wires. We have already seen a safe haven like Gold ramping up above the $1300 level on the back of the latest global growth concerns.
“The rand had a bit of a reprieve on Friday with the US dollar coming under pressure and [the currency] could continue to be under pressure should the calls for a cut in the US interest rate become louder. However, we expect a volatile week for the rand with major data releases out of the course of the week.
“We have the South African GDP number out tomorrow, which could confirm that there was a contraction in Quarter 1 in the South African economy. We also have the South African Current Account balance out on Thursday and the US non-farm payroll number out on Friday.
“All things considered, it could possibly be a dirt or champagne week for the rand with two-way risks [and] the rand could be below R14,5000 of near the R15,0000 level by weeks end.” – Fin24
