Meltwater releases report on brands social media usage in Africa

Given the significance of today’s CPI number, it is not at all surprising that the market has opened fairly flat this morning. The rand is staying around the R16.91 level, where it opened this morning, after breaking below the R17.00 level yesterday evening on the back of the US dollar trading a little weaker.

We have seen the US dollar a little softer after US treasury yields have dipped a little in the last couple of days as the markets expect inflation to continue its downward trajectory. The greenback is currently trading at 1.0766 against the euro.

Treasury yields fell on Wednesday, a day before the release of key consumer price data. The market anticipates that inflation is on a sustainable downward path and that the Federal Reserve will cut interest rates by year-end. The market is expecting the number to print at 6.6% YoY, and should the number print higher, we could expect a strong rally in the US dollar. The opposite also holds true.

Overall market sentiment is risk-on

We have seen that the US dollar index is slowly ticking down, testing the 103 level, as the market is slowly moving out of the US dollar and back into riskier assets. We have seen the US stock markets also trading in the green, which only encourages risk-taking behaviour in the market.

Gold is also testing eight months highs around the $1,885 level per ounce, and Brent Crude is picking up after projections for 2024 look like demand for Oil will increase markedly. The uptick in demand has overshadowed the jump in stockpiles that the US reported last week, which caused Brent to trade below $80 per barrel. Brent Crude is trading at $82.89 per barrel.

While the sentiment is currently firmly on the risk-taking side, we do expect the CPI print this afternoon to either amplify or negate the current sentiment in the market.