The rand was firmer against the dollar on Tuesday afternoon as expectations that the US Federal Reserve will cut interest rates as early as July continue to put the dollar under pressure.
The Fed hinted that it may loosen monetary policy should the US-China trade war and weak inflation persist. Markets have already priced in the chance of a rate cut in July at 100%.
“It is now up to Fed chair Jerome Powell to manage these market expectations. Central banks have clearly made a dovish pivot and we don’t think he will undermine that,” London Capital Group research head Jasper Lawler said.
“More talk of doing what is ‘appropriate to sustain the expansion’ seems likely. We do think he will try to dispel the idea of a 50-basis-point cut in July. That could give the dollar some respite, and see gold pull back short-term before the Group of 20 (G20) summit.”
By 2.30pm, the rand had strengthened 0.46% to R14.30/$, 0.52% to R16.2903/€ and 0.43% to R18.214/£. The euro was little changed at $1,1392.
The price of gold also benefited from the dollar’s weakness reaching a six-year peak in intraday trade. Gold had gained 0.41% to $1,425.12/oz while platinum had fallen 0.17% to $815.18. Brent crude was flat at $64.80 a barrel, despite escalating tension between the US and Iran.
Investors will be keeping a close eye on the G20 summit later this week as US President Donald Trump and Chinese President Xi Jinping are set to meet in an attempt to resolve the prolonged trade war between the two countries.
Earlier, Statistics SA reported that nonagricultural employment in SA improved 0.8% year on year in the first quarter, with employers adding 76,000 staff to their payrolls, notably those in the retail trade and business services sectors.