The rand carried negative momentum into the new week as financial markets turned the attention to Wednesday’s FOMC decision, according to NKC Research.
Trading volumes were also thinner as both Chinese and Australian markets were closed for holidays, which limited activity; even those market participants who were working in Asia were largely on hold before Wednesday afternoon’s FOMC decision.
While the FOMC is expected to maintain a very dovish policy stance, we look for the committee to signal it will be “vigilant and closely monitor” inflation and inflation expectations. The gradual shift to a less extremely accommodative policy stance represents the initial pivot towards an announcement of QE tapering, starting in early 2022, followed by two 25-bps rate hikes in 2023.
At the close of local trade, the rand quoted 0.32 percent softer, at R13.73/$, after trading in range of R13.69/$ to R13.80/$. The rand traded mostly sideways overnight. The expected range of the rand against the dollar today is R13.60/$ to R13.90/$.
South African bourse
The JSE All Share (+0.27 percent) ended stronger yesterday, as resources (+1.12%) solidified the gains seen on Friday. In the overall emerging market sphere, the MSCI Emerging Market Index (0.09 percent) traded higher.
Brent crude oil
The Brent oil price traded higher yesterday, supported by the economic recovery and acceleration of vaccinations in developed countries. At the close of local trade, benchmark Brent crude futures registered 0.4 percent higher at $73.35pb. Crude prices traded slightly weaker during Asian trade this morning.
BUSINESS REPORT ONLINE