The Rand started around the R17.20 level this morning and weakened quite sharply to R17.30 in the morning trading session. Since the initial run-up, it has stayed relatively stable around the R17.30 level, as no noteworthy events happened in the market. Pinpointing the reason why the Rand lost ground so quickly this morning is unclear, but we did see most of the EM markets have the same knee-jerk, and we could only speculate that a fresh wave of recession talk has entered the market. For the most part, the US dollar also stayed range bound, making the move by EM markets this morning a little more confusing. The US dollar is trading at 1.0857 against the Euro.

Sideways could continue

Looking at the rest of the week, there is very little in the way of data or events. With the Fed announcing its blackout period and no news coming from the Fed for the next couple of weeks, data will drive the momentum in the market. The only major release this week is the US GDP number which will be released on Thursday. Between now and Thursday, we expect the market to continue on the sideways path until Thursday. On the South African front, we also have the MPC meeting on Thursday, where the MPC expects to hike interest rates by 50 basis points. A hike is most probably priced into the market, but the rhetoric surrounding the decision will be scrutinized by the market. 

#ZAR #CurrencyMarkets #Recession