The rand was on track for the fifth consecutive day of gains on Tuesday morning, while the JSE was slightly weaker amid mixed global peers as investors await key US data this week.
RMB analysts said the local currency emerged as the best-performing emerging market currency on Monday, gaining 0.55% against the dollar on the day.
“A confluence of ebbing global investor risk aversion and renewed inflows into the industrial and precious metals commodity complex on the day saw dollar-rand breaking below the technical support level of R18.2658/$, before rallying to R18.1780/$,” RMB analysts said.
“Even though overnight activity has seen the dollar and rand pair rebound towards levels around R18.25/$, we believe that trading activity below the R18.26/$ level still emboldens rand bulls today,” they said.
At 10.46am, the rand had strengthened 0.19% to R18.2057/$ and 0.19% to R19.8839/€, while it was little changed at R23.3002/£. The euro was unchanged at $1.0923.
This week investors will closely watch reports on consumer price inflation (CPI) due on Wednesday, producer price inflation (PPI) due later on Tuesday and retail sales, due on Thursday, for fresh insights into the US economy. The ideal scenario for markets would be data showing a continued slowdown in inflation, combined with strengthening US retail sales. This combination would indicate that the Federal Reserve’s interest rate hikes since 2022 were effectively curbing inflation without tipping the economy into a recession.
Recent economic data has raised concerns that the Fed might be losing its balance. Surprising weaker-than-expected key jobs data earlier in August sparked worries that the Fed’s rate hikes might be too aggressive.
Analysts warn that higher-than-expected inflation could trigger a significant market downturn. Conversely, a weakening economy with worsening inflation — a phenomenon known as stagflation — poses a challenge for the Fed, reported Bloomberg.
“While the backdrop remains largely unchanged, there is a sense of caution in global markets as investors await key US inflation data that is due for release today and tomorrow,” said Citadel Global director Bianca Botes.
At 10.50am, the JSE all share had lost 0.12% to 80,464.05 points and the top 40 was down 0.13%. Banks had gained 0.23%, financials 0.19% and food producers 0.1%. Industrial metals had lost 0.83%, resources 0.75%, precious metals 0.52% and retailers 0.46%.
At the same time in Europe, the FTSE 100 and France's CAC 40 were little changed, while Germany's DAX had added 0.16%.
Earlier in Asia, Japan’s Nikkei soared 3.45%, while the Shanghai Composite gained 34% and Hong Kong’s Hang Seng 0.3%
In commodity markets, gold lost 0.45% to $2,460.99/oz and platinum 0.22% to $934.4/oz. Brent crude was little changed at $82 a barrel.
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