Rand’s winning streak peters out
The rand was weaker on Monday morning, shedding gains after ending Friday at a three-week high, as investors continue to digest reports from the US-China trade talks.
The local currency has been the best-performing among emerging-market currencies over the past five sessions, gaining almost 2% on Friday bolstered by improved market sentiment as the US and China agreed on a “phase-one” deal. But it had pared gains by Monday morning, weakening to R14.85/$ in intraday trade after strengthening to R14.70/$ during Friday’s session.
“Given the voracity of the move [in the rand] on Friday I would expect some sort of retracement this morning,” Standard Bank currency trader Warrick Butler said.
As part of the deal, the US has agreed to halt a tariff hike on $250bn worth of Chinese goods, and China will purchase more US agricultural products. The protracted trade war has contributed to investor fears that the global economy is slowing down, with some analysts sceptical that the US and China will soon a reach a complete trade deal.
“While such optimism may lend risk assets further support over the coming days, it is still too early to conclude that a new bull run will occur,” FXTM market strategist Hussein Sayed said.
“There is every chance that the trade wars is not done and dusted, if anything we all know how fickle [US President Donald] Trump can be and even through verbal agreements have been made, nothing has been signed yet,” Butler said.
At 9.55am, the rand weakened 0.41% to R14.8532/$, 0.27% to R16.3652/€ and was flat at R18.6771/£. The euro weakened 0.13% to $1.1018.
Both gold and platinum were flat at $1,489.72/oz and $891.57/oz, respectively. Brent crude lost 1.65% to $59.66 a barrel.
Source: businesslive.co.za