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Rand awaits Cabinet announcement, but ongoing US-China spat still key

May 14 2019 10:19
Fin24

The rand is expected to trade in a range between R14.15 to R14.45 ahead of the announcement of the country's new Cabinet, TreasuryONE said in a morning note to clients.

Reaction to the "tit-for-tat" trade war between China and the US is also impacting the local currency. 

By 09:52 on Tuesday, the rand was changing hands at R14.24 to the greenback, up 0.6% on the day. 

"China imposed retaliatory tariffs on $60 billion worth of US goods yesterday which initially added to the risk-off sentiment in markets, but US President Donald Trump’s statement that he expected the trade negotiations to be successful, calmed markets," said TreasuryONE. 

The Bloomberg dollar spot index - its value relative to a basket of six foreign currencies - was unchanged at 97.34 on Tuesday morning, while the Chinese Yuan recovered overnight.

US shares had a tough trading day on Monday. "Wall Street was sold off heavily [on Monday] with Tech stocks being particularly hard hit. The S&P lost 2.41%, the Nasdaq 3.41% and the DOW 2.38%. Asian stocks also closed down this morning with the Hang Seng down 1.58%," said TreasuryONE. "Gold rose on the news of China’s tariff increases and broke above the $1 300.00 level. The price has slipped to $1 299.45 this morning."

"The oil price initially rose [on Monday] on the tensions in the Middle East and news from Saudi Arabia that two of its oil tankers had been attacked but has settled back at $70.42 this morning."

Bianca Botes of Peregrine Treasury Solutions said the US-China "tit-for-tat trade war games" were once again shaking global markets. She predicted the day's trading range to move a notch weaker to R14.26 to R14.42 to the dollar.

Find everything you need to know about the 2019 National and Provincial Government Elections at our News24 Elections site, including the latest news and detailed, interactive maps for how South Africa has voted over the past 3 elections. Make sure your News24 app is updated to access all our elections coverage in one place. 

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