US-China trade war keeps rand under pressure

The rand was weaker against major global currencies on Monday morning, remaining under pressure amid uncertainty over the future of US-China trade relations.

Investors heavily sold off riskier assets last week after it emerged that the US and China may be further away from a new trade deal than previously expected.

The US raised import tariffs on Chinese goods last week, and the market is now waiting for China’s promised retaliation, while US President Donald Trump has said he is considering even more protectionist measures.

The rand was weaker on Monday morning, but has gained since last week’s general election. Analysts maintain that the ANC’s electoral victory — albeit a reduced one — should allow room for President Cyril Ramaphosa to pursue his policy agenda.

The performance of the DA and ANC was a clear sign that voters were choosing more centrist policies, said Anchor Group CEO Peter Armitage in a note on Sunday. The fact that the ANC received a majority in Gauteng was also positive, said Armitage. This has avoided the need for a coalition government in SA’s economic hub.

At 9.33am the rand had weakened 0.77% to R14.2744/$, although it has gained 1.09% since its close last Tuesday, the night before the national election.

The rand was 0.71% softer at R16.0279/€ and 0.78% to R18.5614/£. The euro was flat at $1.1228.

The yield on the benchmark R186 had added 25 basis points to 8.475%. Bond yields move inversely to bond prices.

Focus this week remains on the US-China trade war, and some analysts remain hopeful that a deal can be reached soon. China has invited US officials to Beijing for further talks this week.

There is also some data to give markets direction this week, including US retail sales numbers for April on Wednesday. Local retail sales numbers for March are due on the same day.

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