The rand was little changed on Thursday, giving back some of the gains it made this week, while the JSE pared losses as investors digested US economic data.
TreasuryONE director and head of market risk Wichard Cilliers said the dollar index has held steady about the 109.12 level, reflecting cautious sentiment as markets digest the mixed US economic data released recently.
Markets have rallied over the past two sessions on hopes that a favourable December consumer and producer inflation reports could prompt the Federal Reserve to implement further interest rate cuts this year.
However, retail data released on Thursday painted a mixed picture. While US retailers saw sales growth in December, the increase was not as robust as economists had anticipated. Core retail sales rose 0.4% in December, falling short of expectations of 0.5%.
Furthermore, an initial jobless claims report revealed a surge in US workers filing for unemployment benefits last week, according to Bloomberg.
“Despite this modest growth [in retailers], initial jobless claims surged, fuelling speculation about potential Fed interest rate cuts later this year and influencing market sentiment,” said Cilliers. “The claims data showed a notable increase, adding to the narrative that the Fed may reconsider its rate hike trajectory.”
Regarding the rand, Cilliers said the pullback comes after a three-day rally, with the local currency mirroring trends among other emerging market currencies.
At 5.40pm, the rand was little changed at R18.81/$, while it had weakened 0.16% to R19.38/€ and 0.2% to R23.01/£. The euro was 0.12% firmer at $1.03.
“Looking ahead, investors are cautiously watching President-elect Donald Trump’s inauguration next week, with concerns over potential tariff policies that could amplify inflation and support the dollar further,” said Cilliers.
The JSE all share gained 0.17% to 83,658 points and the top 40 was 0.24% firmer.
At 6pm, the Dow Jones industrial average was 0.19% to 43,138 points, while markets were firmer in Europe.
Investors were also eagerly anticipating the release of more big bank earnings reports in the US, following a string of impressive results from some of the country’s largest financial institutions.
Notably, Goldman Sachs saw its profit more than double, while JPMorgan and Wells Fargo both reported substantial profit increases that exceeded forecasts.
Citigroup swung back to profitability, beating consensus expectations for per-share earnings, and Bank of New York Mellon also surpassed forecasts with an 11% increase in revenue, according to Bloomberg.
Gold gained 0.21% to $2,717.98/oz and platinum 2.1% to $953.20/oz. Brent crude was 1.04% weaker at $81.18 a barrel.
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