Risk off and Moody’s woes

The rand tracked back above the R18.00 handle today, the first time since rumors emerged for the Phala Phala saga back in November. Continued risk-off sentiment, a stronger dollar, and a warning from Moody’s over their concern about the potential impact on GDP from load-shedding have been the catalyst for the rand’s performance today. Looking at other EM currencies, the inherent risk built into the rand over load-shedding does seem to be mostly priced in, with the rand tracking a similar pattern to its peers in the past few sessions. Although we are still weaker than most other currencies, we have traded back to R17.90 this afternoon.

US CPI likely the key

Anticipation for January’s CPI print has built up nicely over the past few sessions as markets started betting on the Fed to have more room to hike rates. Tomorrow’s print could speak justice to the recent dollar strength if inflation exceeds the 6.2% year-on-year expectation, while a softer number could provide some improved risk sentiment for the rand. The dollar has traded softer during the afternoon, currently quoted at 1.07 and 1.21 versus the Euro and Pound, complementing the move we see in the rand back to its opening levels.

#PhalaPhala #Moodys #GDP #LoadShedding #Eskom #CPI