Markets Wrap: Weaker rand, higher oil bad news for motorists

The rand traded back on the back foot as the dollar pushed the local currency back above R14.30 during the US session. By local markets close, the rand was hovering close to a one-month high, testing the mid-R14.30s yet again, writes TreasuryONE. “With not much news out locally nor elsewhere, the local unit continued to track the movements of a stronger dollar which is still resilient from last week’s FOMC minutes,” the trading house said in a note to clients.

Commodities, one of the main sold-off asset classes during the past few days, continue to struggle for traction against a stronger dollar. Gold has slipped 0.2%, while palladium lost another 1%. Platinum bucked the trend, climbing back to $1,069 after its sell-off last week. Brent Crude remains strong at $74.90 while WTI is still above $73.37. A higher oil price and weaker rand do contribute to upwards pressure on the local petrol price, which is currently in an under-recovery for June.

Higher fuel prices, along with the expected increase in energy prices, will play its part, impacting on inflation during July. Inflation numbers for May set to be released tomorrow with TreasuryONE expecting an increase of 0.1% month-on-month due to higher food and fuel prices.

Internationally, the dollar remains strong but is struggling to break technical levels against majors like the euro and pound. According to TreasuryONE the euro has mostly tracked sideways between the 1.1870 and 1.1920 since the later part of Friday, while the pound holds just above the 1.3900 level.

“With the Federal Reserve continuing to drain liquidity in the short term, we can expect the dollar to remain strong and perhaps look to test even stronger,” says TreasuryONE.

US equities have been fairly flat with the Nasdaq and S&P 500 slightly up, while the Dow Jones is currently softer.

Indicators as of 17:00 (CAT)

USDZAR           14.3666
EURUSD           1.1896
EURZAR            17.0854
GBPUSD          1.3914
GBPZAR           19.9837
AUDZAR          10.7947
CADZAR           11.5947
CNYZAR            2.2175
ZARJPY            7.7042
CHFZAR            15.6027
USDAOA          645.53

Equities and bonds
R186              7.43%
US 10 Year       1.48%
JSE                 -0.10%
FTSE               0.29%
S&P 500          0.13%

Gold                $1 779.46
Plat                 $1 069.68
Plad                $2 564.70
Rhod               $19 990.00
Irid                  $6 090.00
Ruth                $748.00
Copp               $9 190.50
Brent               $75.02
Iron Ore 62.5% $212.75
Coal API4         $111.00
Gold ZAR         R25 553.05

Indicators brought to you by TreasuryONE

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