The rand recovered slightly on Thursday, with the JSE ending the session on a firmer note, while the US stock markets remained closed in observance of a national day of mourning for former president Jimmy Carter.
Initially, the local currency weakened to nearly R19 to the dollar in intraday trading before making a recovery.
According to Wichard Cilliers, TreasuryONE director and head of market risk, the dollar’s strength continued to rise, supported by higher US treasury yields and growing uncertainty surrounding president-elect Donald Trump’s shifting stance on trade tariffs.
“Global markets continue to react to uncertainty surrounding Trump’s tariff policies. There is growing nervousness over the potential inflationary impact of these tariffs, which has driven up treasury yields,” Cilliers added.
At 5.45pm, the rand had strengthened 0.15% to R18.91/$, 0.25% to R19.48/€ and 0.35% to R23.27/£. The euro 0.13% weaker at $1.02.
Meanwhile, investors are assessing the pace of future Federal Reserve rate cuts.
Minutes from the Fed’s December meeting, released on Wednesday, showed that most committee participants expected upside risks to the inflation outlook. This fuelled concern that the Fed might cut rates fewer times than expected this year.
“Participants indicated that the committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” the minutes said.
Investors are now waiting for the December nonfarm payrolls (NFP) report, scheduled for Friday.
According to a Bloomberg survey of economists, the upcoming NFP report is expected to show a modest increase of 157,000 jobs, after a stronger-than-expected gain of 227,000 in November. The unemployment rate is predicted to remain steady at 4.2%, with average hourly earnings maintaining a 4% annual growth rate.
The market hopes that the NFP report will strike a balance, demonstrating sufficient economic strength to alleviate recession concerns while avoiding an overly robust reading that might deter the Fed from continuing to cut interest rates.
This week’s US labour data has been mixed, with job openings and jobless claims indicating economic resilience, while the ADP employment report fell short of expectations, adding to the uncertainty surrounding the labour market.
The JSE all share had gained 0.66% to 83,698 points and the top 40 0.8%.
At the same time in Europe, the FTSE 100 added 0.72% and France’s CAC 40 0.6%, while Germany’s DAX was little.
Gold gained 0.19% to $2,669.46/oz and platinum 1.14% to $980.9/oz. Brent crude was 1.17% firmer at $77.05 a barrel.
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