The flip side of a weaker dollar is a stronger rand. Photo: Reuters
By midday the rand had gained ground against a weaker dollar up 1.09% at R19.01 as markets traded cautiously ahead of US growth data.
Bianca Botes, a director at Citadel Global, said in her Thursday note, “The dollar saw marginal gains in overnight trade as markets position for the all-important US GDP (gross domestic product) release today. Expectations are that it will indicate continuing resilience in the US economy, and shatter any hopes of an imminent rate cut by the Fed.”
She said emerging market currencies were trading cautiously, with the rand remaining range-bound.
On the data front, Citadel were anticipating the release of the European Central Bank economic bulletin, local Producer Price Index and US jobless claims.
“The rand is hovering between R19.10/$ and R19.25/$, with the data release scheduled over the next two days likely to provide new impetus. The rand is currently trading at R19.22/$, R20.57/€ and R23.95/£,” Botes added.
The dollar index was subdued around 105.8 as investors avoided making big bets ahead of US GDP data for the first quarter, Trading Economics said. The dollar held recent declines against most major currencies.
Trading Economics said the US economy likely expanded at an annualized rate of 2.5% in the first quarter of 2024, marking a slowdown for the second consecutive quarter from the 3.4% growth seen in the previous three months.
In local data, annual producer price inflation in South Africa edged up to 4.6% in March 2024, compared with February's 4.5%. The main contributors to the acceleration in overall PPI inflation were food products, beverages and tobacco products (+4.4% vs +4.3% in February), paper & printed products (4.4% vs 2.8%), coke, petroleum, chemical, rubber and plastic products (+4.6% vs 4+%), metals, machinery, equipment and computing equipment (+5.5% vs +5.2%), and furniture & other manufacturing (+2.6% vs +0.8%).
Crude oil
Brent crude futures steadied around $88 (R1 673) per barrel after facing downward pressure in the previous session, as investors weighed the potential impact of delayed US rate cuts on the demand outlook, according to Trading Economics.
Gold
Gold held near $2 320 per ounce as investors turned their attention to more US economic data to seek additional clarity into the Federal Reserve's monetary direction after digesting recent economic figure
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