The rand was on track for a second day of gains on Tuesday, while the JSE was slightly firmer as investors await this week’s major events.
Markets are looking ahead to the Federal Reserve’s next rate decision, with the central bank due to conclude its federal open market committee meeting on Wednesday. Also on Wednesday, the US is expected to release a consumer inflation report for May.
Fed chair Jerome Powell and several Fed officials have stuck to the same tune, saying they want to see inflation moving “sustainably” down to the central bank’s 2% target before starting with the rate cuts — indicating interest rates may need to stay higher for longer.
TreasuryOne currency strategist Andre Cilliers says despite the local currency gains, as a whole the rand remains in an R18.60-R18.95 range to the dollar for now. “Trade remains on the cautious side ahead of CPI and the FOMC tomorrow.”
Cilliers cautioned that an expected hawkish stance from the FOMC on Wednesday would keep the dollar on the front foot as a higher-for-longer Fed stance would continue to favour the dollar in the short term.
At 10.15am, the rand had strengthened 0.54% to R18.6361/$, 0.19% to R20.1018/€ and 0.15% to R23.7299/£. The euro was 0.48% weaker at $1.0759.
On the political front, it seems likely that the government of national unity (GNU) will comprise the ANC, DA and some of the smaller parties, and will exclude the MK, EFF and Action SA.
Chief Justice Raymond Zondo has confirmed that the first sitting of the new National Assembly, at which the new president will be elected, will be on Friday.
Cilliers added that trade remained on the cautious side ahead of CPI and the FOMC on Wednesday, as well as the local political developments.
At 10.35am, the JSE all share had gained 0.12% to 76,271.05 points and top 40 was up 0.13%.
At the same time in Europe, the FTSE 100 and Germany’s DAX were little changed, while France’s CAC 40 had gained 0.16%.
Earlier in Asia, the Shanghai Composite lost 0.76% and Hong Kong’s Hang Seng 1.04%, while Japan’s Nikkei gained 0.25%.
In the commodities market, gold lost 0.16% to $2,306.49/oz and platinum 1.32% to $962.8/oz. Brent crude was 0.13% weaker at $81.52 a barrel.
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