Rand firmer as Jerome Powell’s speech takes focus

The rand was a little firmer against major global currencies on Friday morning, but caution prevails on global markets ahead of a speech by US Federal Reserve chair Jerome Powell.

Traders are anxiously watching for any shift in tone from Powell, with markets betting on a series of interest rate cuts from the Fed, something which would support risk assets, including emerging market currencies.

“To say that the stakes are high for the meeting is an understatement,” said London Capital Group’s head of research, Jasper Lawler. “Powell will take to the stage less than a month after the Fed’s first interest rate cut in a decade and amid market expectations of another cut next month.”

At 9.33am the rand had firmed 0.32% to R15.1973/$, 0.44% to R16.8229/€ and 0.73% to R18.5543/£. The euro was 0.1% weaker at $1.1069.

Local issues are taking a back seat, but developments include a warning from Eskom that load-shedding may be imminent, as well as reports that the Treasury has instructed government departments to begin planning for budget cuts over coming years.

Late on Thursday, Moody’s Investors Service said it had taken note of these reports, but maintained its position that the government’s room to manoeuvre was limited.

“Late headlines from Moody’s had very little impact, but suggest that the agency is keenly monitoring local developments,” said Sasfin Wealth fixed-income dealer Alvin Chawasema.

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