The rand extended the previous session’s gains on Tuesday, with the JSE firming amid mixed global peers as investors watched the US presidential race.
Market participants are gearing up for the result of the presidential election as the final day of voting draws to an end on Tuesday.
Though it will take several days to determine the winner, experts are still watching numbers from different polls, which showed a tight race between US vice-president Kamala Harris and former president Donald Trump.
On Tuesday, the TIPP poll — an economic optimism index by Investor’s Business Daily, which gives an early look at how US consumers feel about the economy, personal finances and federal policies — has Harris and Trump tied at 48%, while the Ipsos Business Daily gives Harris a slight edge — 50% to 48% — reported Bloomberg.
Meanwhile, the Atlas Intel poll shows Trump leading by one percentage point — 50% to 49%. In key states, Trump appears to be holding his ground in Arizona and North Carolina, while Harris is closing the gap in Nevada, Georgia, and Pennsylvania.
“Global markets are in an upbeat, albeit cautious, mood as Americans head to the polls for a close presidential race between Trump and Harris. Most pollsters see this race as a dead heat, with each candidate having nearly equal odds,” said TreasuryONE currency strategist Andre Cilliers.
“The outcome remains unpredictable, adding to the gridlock about who will ultimately take the White House.
“In anticipation of significant price swings, traders have been actively hedging against potential outcomes. A Kamala Harris victory is expected to weaken the dollar, potentially boosting emerging market currencies like the rand. Conversely, a Trump victory could strengthen the dollar, pressuring the rand to fall,” said Cilliers.
At 6.48pm, the rand had strengthened 0.43% to R17.4365/$ and 0.21% to R19.02/€, and it was little changed at R22.682/£. The euro was 0.37% firmer at $1.0918.
Market participants are also closely watching the Federal Reserve’s rate decision to be delivered on Thursday. Investors will watch Fed chair Jerome Powell’s post-meeting commentary for clarity on future rate moves.
According to CME Group’s FedWatch tool, traders are predicting a 96% chance of a rate cut of 25 basis points after a significant 50 bps move in September.
“The Fed’s decision to cut rates is likely to add further volatility to an already tense market atmosphere,” said Cilliers.
The JSE all share gained 0.49% to 86,642 points, with major indices mixed, while the top 40 added 0.57%.
At 6.15pm, the Dow Jones industrial average was 0.77% firmer at 42,116 points, while markets in Europe were mixed.
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