The rand was firmer on Thursday, with the JSE little changed after the US consumer inflation report gave a mixed picture.
The US inflation rate eased to 2.4% in September, slightly below the preceding months’ pace. Although traders anticipated a steeper decline to 2.3%, the modest slowdown suggests persistent inflationary pressures.
Notably, core inflation — excluding food and energy — unexpectedly rose to 3.3%, surpassing expectations of 2.3%. It indicates elevated inflationary pressures in stable sectors of the economy. This is often seen as a more reliable gauge of underlying inflation trends, as it filters out the short-term volatility of commodity prices.
Another data released earlier in the day showed the weekly jobless claims, which indicate the number of Americans filing for unemployment benefits, rose to 258,000, the highest level since August 2022, and surpassing expectations of 230,000.
The uptick raises concerns about the labour market softening and its implications for economic growth. As jobless claims rise, it may signal a need for monetary policy easing, including potential interest rate reductions
TreasuryONE director and head of market risk Wichard Cilliers said traders were balancing inflationary concerns with indicators of economic weakness, such as rising jobless claims, which may lead the Federal Reserve to prioritise supporting economic growth through lower rates, even though inflation has not entirely subsided.
“Despite [core] inflation being above expectations, there are signs that the economy is slowing, particularly with higher unemployment claims, and the Fed is widely expected to cut rates to stimulate growth,” said Cilliers.
The rand gained the most in a month, firming below R17.50 against the dollar.
Cilliers said despite investor optimism that the slightly softer inflation numbers could lead to a rate cut, the rand’s gains were limited.
“The underlying economic concerns, such as [those about] core inflation, remain high, tempering investors’ enthusiasm and limiting [the] rand’s gains,” said Cilliers.
At 6.40pm, the rand had strengthened 0.71% to R17.5177/$, 0.87% to R19.1252/€ and 0.79% to R22.8668/£. The euro was 0.14% weaker at $1.0924.
The JSE all share and the top 40 were little changed, with the former at 85,392 points. Major indices were mixed.
At 6.45pm, the Dow Jones industrial average was 0.21% weaker at 42,424 points, while European markets were mostly weaker.
In the commodities market, Brent crude prices had risen 3% to $77.78 a barrel by 6.50pm local time.
Cilliers said the rise in the oil price was due to geopolitical risks in the Middle East continuing to create uncertainty about oil supplies, contributing to the upward pressure on prices.
“Meanwhile, [Hurricane Milton’s] impact on Florida spiked fuel demand, with about a quarter of the state’s fuel stations running out of petrol, pushing up oil prices,” said Cilliers.
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