The rand has been trading fairly range bound between R18.07 and R18.17 as we wait for tomorrow’s FOMC minutes of the September meeting and the CPI print on Thursday. The euro has been trading in a similar fashion, with the dollar not gaining ground nor losing ground among its major peers. The pound, however, has been slightly more volatile but ends the day in line with this morning’s open. The September minutes and September CPI is expected to be the next catalyst for the dollar and, therefore, will be for the rand as well.

Slightly more volatility in the commodity sector, with platinum and palladium currently down 1% for the day. Brent Crude and WTI are off this week’s high, with Brent Crude losing nearly $3 on the day as Covid concerns spark up again in the world’s second-largest economy. Gold has been on the back foot since last week as the strong dollar weighs down the yellow metal and currently changes hands just below the $1,670 handle.

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With the US being out of the market today, we have seen the market trading in a fairly subdued manner. The rand and other emerging market currencies enjoyed the reprieve from the US dollar flexing its muscle, and the rand has strengthened within eyesight of the R18.00 level after opening the day around the R 18.18 level. With the amount of data out this week, it is almost a given that the market will gain fresh momentum, and the picture in the market could look a lot different than we started the week. There is also the renewed fear of the war escalating in Ukraine, which could come to bite risky assets as the world uns to safety again.

The biggest data out this week comes from the US, with the US Fed minutes out on Wednesday, followed by the US CPI number out on Thursday. Any print above the 8.1% expected number would be positive for the US dollar, and we could see the EM market struggle.

Initial Weekly jobless claims increased from 209,000 to 219,000, but most of the jobless claims have been ascribed to Hurricane Ian wreaking havoc on the state of Florida. The interesting data set of the release was the announced job cuts jumped 46% to 29,989 in September. We did see the US dollar briefly losing some steam, but it has roared back with a vengeance and is currently trading at 0.9830 against the Euro. This has meant that the Rand has shifted weaker a little to trade above R17.90 after spending most of the day trading around the R17.80 level. This is merely a taster of the market reaction we could expect tomorrow with the US non-Farm payroll number.

Brent Crude is trading above $90 per barrel after OPEC announced a 2 million barrel per day supply cut. The question remains whether the supply cut will matter should demand to falter if recessions become the norm in economies worldwide. This could put further pressure on the oil price to fall further. Brent Crude is currently trading at $93.50 per barrel. Gold is also trading weaker at $1,709 per ounce after surging the last couple of days. 

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The Dollar has once again bounced quite strongly as the US markets opened this afternoon with the Pound falling to 1.1250 after nearly hitting 1.1500 earlier today. The Euro has also fallen to .9860 after having nearly reached parity earlier. Wall Street has opened sharply weaker as risk sentiment turns negative and US bond yields rise once more. The Rand is tracking the weaker majors and is currently trading 1.4% weaker at 17.88. Volatility is going to remain the name of the game as markets look for any hints as to what the Fed and other central banks' monetary policy trajectories are likely to be going forward.

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A softer dollar has been the main driving force intraday as markets take a breather from the rampant dollar we saw during September. Job openings in the US plunged by more than 1 million during the month of August, potentially showing an early sign that the labor market gap in the US is beginning to close and led to the dollar being sold off late afternoon. The euro and pound have both rejoiced from are up nearly 1% for the day. We see the euro quoted back above the 0.99 mark, while the pound is trading around the 1.14 handle. The rand and other EM’s are all benefiting from markets being happy to trade on more risky assets, with the local currency also over 1% stronger for the second day in a row. The rand saw a low of R17.63 after trading above R18.00 just yesterday morning. 

A softer dollar led to the euro and pound grinding slightly higher during the day, with emerging market currencies trading in a similar fashion. Late afternoon we saw US manufacturing data for September coming in lower than expected, and has spurred some volatility into a market that has seen a dull day. The rand traded in a narrow 10cent range for the most part of the day but traded to the lower R17.80’s after the release of the US manufacturing data. There is still a sense of uncertainty surrounding the financial instability of Credit Suisse and Deutsche Bank, reportedly being under pressure and could keep markets at bay from riskier assets in the short term. 

The UK government did make a massive U-turn on their proposed tax deal to cut taxes for higher earners, which ultimately sent the pound to its weakest levels against the dollar just over a week ago. The pound has since recovered from its all-time low and is up 1% for the day, trading around the 1.1280 mark. The euro is also off its recent lows, trading at .9830 this afternoon as the dollar softened on the back of manufacturing data slowing in September.

US Treasuries are lower across the board, with the 2yr yield closing in on the 4% mark, while the 10yr yield is at 3.61% this afternoon. Equity markets in the US start the week on a positive note, with all three indices currently up over 1.5% for the day. Brent Crude and WTI were both boosted by the Opec+ announcement to lower output, currently up 4.3% and 5.2%, respectively. Gold is also up 1.6% for the day, currently trading at $1,688 and recording a $30 range for the day.

The market volatility continues with the pound still trading in a wide range, but ending the week close to levels week saw at the end of last week. The pound traded between 1.1025 and 1.1234 in this session, but much improved after trading at the all-time low for cable traded at 1.0350 on Monday. The euro has followed suit and consolidated towards the back end of the week, after inflation figures for August came out higher than expected. The expectation was for 9.7%, but CPI in the eurozone rose 10% year-on-year and led to the euro rising to .9850 this morning. The rand has been volatile during this week, but it seems comfortable trading back towards the R18.00 handle every time, and we find ourselves just below this mark as the week draws to a close.

The commodity sector has also benefited from the risk-off sentiment softening during the week, but gold still has a long way to go to get back to levels we are more familiar with. Brent Crude and WTI are down for the day, while copper and palladium end the week on a high. Treasury Yields in the US are lower across the board, with the 10yr yield quoted at 3.7% while the short-term 2yr yield is at 4.15%.

Next week is Golden Week in China, meaning their markets are closed for a whole week and could present an interesting scenario for the Yuan. During the course of the week their will be a lot of second-tier data being released, but main focus should be on the US payrolls numbers out next Friday.

Emerging Markets under pressure

In the last hour of trading, we have seen the Rand and other EM's under pressure. And it seems that markets in the US are turning markets more "risk-averse". We have seen the S&P 500 and Dow Jones down by more than 2% in early morning trade. The Rand has jumped from seemingly being very comfortable below the R18.00 level, but it has jumped to R18.1000. The key is whether the R18.2000 level that the Rand reached at the start of the week will hold again or will it be broken.

EUR and GBP look to have stabilised

With the wild ride that the GBP had over the past few days, we saw the Pound find its feet again and trade at almost 1.10 against the US dollar. The Euro has similarly gained against the US dollar and is currently trading at 0.9725 against the Dollar. While the above movements would usually be Rand positive the current "risk-averse" sentiment in the market looks to have constrained any meaningful Rand retracement in the short term at least.

After the excessive movements of the last couple of days today, we did see some relative calm in the market, with the Rand trading in a 15-cent range since the South African market opened this morning. The Rand is currently trading at R 17.94 and seems rather comfortable below the R18.00 handle. The US dollar is also slightly stronger this afternoon, with the greenback flirting with the 0.9600 level against the Euro. With the Rand not following the US dollar, it could be a case of the Rand having stretched too far, but we need a series of Rand positive sessions to confirm this. The relative calmness has extended to the Pound as well as the rollercoaster from yesterday has subsided a little. 

With not much data out of the US, this week's attention will be focused on the Eurozone on Friday, with the EZ inflation number out. We expect markets to linger in current ranges up until Friday as rampant inflation could see the Euro under pressure further and pressure on the ECB to hike more aggressively into an already weak economy. Friday could be a rough day for the Euro should data reflect a weakening economic situation.

The sharp move on the pound saw markets in utter turmoil this morning, leading to the rand breaking above the R18.00 mark against the dollar. Further pressure has been placed on the euro, with markets remaining sceptical of a recovery in economic growth in the eurozone, but we have seen some recovery on the currency front, which is trading at .9660 this afternoon. The pound is trading at 1.0815 against the dollar and R19.47 against the rand after seeing session lows of 1.0086 and R18.44, respectively.

What has been a perfect storm hitting the EM space. With the current uncertainty and high volatility, we could see the rand continue to trade above the R18.00 handle and perhaps see weaker levels against the dollar. The dollar index is trading at 113.33, down from this morning, when we almost touched 114.