The rand attempted a rebound on Monday, while the JSE weakened, as investors remained cautious ahead of a key US economic data release.
Friday’s stronger-than-expected US nonfarm payroll report raised concern that the US Federal Reserve might proceed cautiously, casting doubt on further interest rate cuts.
Market expectations now suggest a high likelihood that the Fed will hold interest rates at current levels at its coming meetings. According to the CME FedWatch Tool, traders are pricing in a 97% probability of no rate change at the January 29 meeting and a nearly 75% chance of rates remaining unchanged in March.
This week, investors will closely watch key economic data releases, including the December consumer price index (CPI) on Wednesday and the producer price index (PPI) report on Tuesday, which will provide insights into wholesale inflation.
Investors also will be listening to comments by Kansas City Fed president Esther George and New York Fed president John Williams on Tuesday for potential guidance on future monetary policy decisions.
The JSE all share lost 1.7% to 82,045 points and the top 40 1.74%.
At 5.50pm, the Dow Jones industrial average was 0.25% firmer at 42,120 points. In Europe, the FTSE 100 lost 0.38%, France’s CAC 40 0.31% and Germany’s DAX 0.34%.
TreasuryONE director and head of market research Wichard Cilliers said the dollar continued to surge amid strong jobs data and economic outlook in the US.
“The dollar has maintained its bullish momentum, soaring to its highest level in over two years, following Friday’s strong jobs report. This has fuelled expectations the Fed will be less inclined to cut rates in 2025, with many traders now pricing in a single rate cut, down from previous forecasts of multiple cuts. Additionally, rising US bond yields, have further boosted the dollar,” said Cilliers.
“Speculation about president-elect Donald Trump’s tariff policies has added to the dollar’s strength as investors anticipate moves that could increase US inflation, making rate cuts less likely in the near term,” Cilliers added.
At 6.12pm, the rand had firmed 0.19% to R19.08/$, 0.44% to R19.46/€ and 0.17% to R23.21/£. The euro was 0.25% weaker at $1.02.
Gold lost 1.55% to $2,665.96/oz and platinum 0.85% to $973.65/oz. Brent crude was 1.48% firmer at $80.94 a barrel.
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