Markets and the rand on Monday were trading cautiously as they wait for direction, following the outcome of the US Federal Reserve’s interest rate decision later this week.
By 11.56am the rand was trading 0.07% lower against the dollar at R18.77.
The dollar index fell below 106 on Monday as investors turned cautious ahead of the Federal Reserve’s monetary policy meeting this week, where it is widely expected to hold interest rates steady amid strong US economic data and hawkish rhetoric from policymakers, Trading Economics said.
“Markets remain cautious considering persistently high inflation and geopolitical fractures. The yen has slipped to levels last seen in 1990 as the dollar’s strength continues to weigh on its peers,” Bianca Botes, a director at Citadel Global, said on Monday.
On the data front, the key event for this week is Wednesday’s Federal Open Market Committee meeting, which takes place while other economies in the world celebrate their labour days, she said.
“The rand managed to gain back lost ground during trade on Friday. The focus locally, now starts to turn towards the national elections, which take place in a month. The rand starts the day trading at R18.78/$, R20.12/€ and R23.52/£,” Botes said.
South African stocks were at a four-month high.
Trading Economics said the JSE index was slightly up to trade near 75 900 points on Monday, its highest since late December, 2023, tracking major global peers.
Resource-linked stocks and financials were among the top performers. Meanwhile, traders monitored more corporate earnings, while awaiting the Fed’s policy decision later this week, as well as crucial monthly US job figures. Domestically, the attention will be directed to South Africa’s money supply, trade and budget data on Tuesday, for insights into the health of the economy.
Gold
Gold fell under $2 330 (R43 702) per ounce on Monday, as a stable US dollar rendered the bullion less appealing to overseas buyers, while investors remained in anticipation of the Fed’s monetary policy meeting this week after the US Personal Consumption Expenditure data came in line with expectations.
Oil
WTI crude futures fell to around $83 per barrel on Monday, giving back some gains from last week as sticky US inflation further dented sentiment around interest rate cuts, hurting the demand outlook. Data showed that US inflation rose 2.7% in March from a year ago, surpassing expectations of 2.6% and staying well above the Federal Reserve’s 2% target, according to Trading Economics.
BUSINESS REPORT