The rand extended the previous session’s gains on Tuesday morning, as softer-than-expected US consumer price data raised bets that the US Federal Reserve’s rate hiking cycle was over.
The local currency firmed 2.45% — the biggest one-day gain since May — with investors’ optimism building that not only is the Fed’s rate hike over, but the central bank may even start cutting rates early in 2024.
Meanwhile, China’s economic activity showed signs of improvement after data on Wednesday morning showed faster-than-expected growth in industrial output and higher-than-anticipated retail sales for the October readings.
The country’s industrial output increased by 4.6% year on year, beating expectations and marking the strongest growth since April. While retail sales rose by 7.6%, also beating projections and reaching the fastest pace of growth since May.
“The rand rallied as risk appetite jumped and emerging market currencies strengthened, with the greenback nursing its heaviest losses in a year after the US inflation reading came in cooler-than-expected,” TreasuryOne currency strategist Andre Cilliers said.
“Risk sentiment got a further boost after China's industrial production and retail sales numbers beat market estimates,” added Cilliers.
At 10.32am, the rand had strengthened 0.24% to R18.1816/$, 0.31% to R19.7635/€ and 0.5% to R22.661/£. The euro was little changed at $1.0869.
Investors were awaiting US retail sales and producer price data scheduled to be released later on Wednesday for further clues into the state of the US economy, and insights into the Fed’s monetary direction.
At 10.50am, the JSE all share had gained 1.78% to 74,750.40 points and the top 40 was up 1.95%. Precious metals had added 2.37%, banks 2.23%, financials 1.92%, SA listed property 1.91%, industrials 1.85%, resources 1.7% and industrial metals 1.48%.
In Europe, France’s CAC 40 was up 0.77% and Germany’s DAX 0.64%.
Earlier in Asia, the Shanghai Composite index added 0.55%, Hong Kong’s Hang Seng 3.72% and Japan’s Nikkei 2.52%.
Gold gained 0.44% to $1,971.72/oz, while platinum was little changed at $888.1/oz. Brent crude was 0.23% firmer at $82.14 a barrel.
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