What we know
Despite the open and close of last week’s trading being only a cent or two apart, the Rand traded in a range of roughly 30 cents in what seemed to be a week of market consolidation. The Dollar Index was able to gain some ground early in the week on the back of positive Dollar sentiment and a hawkish Fed.
A stronger Dollar generally tends to exert downward pressure on the Rand and although we have seen some weakening, the Rand seemed able to maintain some strength. The benefit of a relatively higher interest rate locally makes the ZAR a popular candidate for carry trading, which seems to be supporting the local currency as long as there is enough risk-on sentiment to warrant holding emerging market currencies.
In terms of the conflict in the Middle East, the US and Iran exchanged attacks over the weekend but as of the start of the week it appears that peace talks are still ongoing as both sides have agreed to halt strikes to pursue a peace deal.
Looking at news from the UK, Prime Minister Keir Starmer announced that he would be resigning as Prime Minister. The UK will now need to elect its seventh Prime Minister in a decade.
What others say
Reuters – Oil steadies as US and Iran agree to halt attacks
“Oil ‌prices steadied on Monday as Iran and the United States agreed to halt recent hostilities in the Gulf and Middle East producers pushed ahead with loading oil and ​liquefied natural gas despite fresh ship attacks.“
Zero Hedge – Kevin Warsh Just Took 30 Years of Fed Culture to the Wood-Chipper
“Yesterday marked the end of the first Federal Open Market Committee (FOMC) meeting under the Fed’s new Chairman Kevin Warsh.“
Daily Maverick – New demerit system: What South African motorists need to know
“The AARTO demerit system is expected to roll out from 1 July 2026. Many motorists may be unclear about how it will work and what the consequences could be“
Visual Capitalist – Mining Mapped: Which Countries Hold the Biggest Mineral Reserves?
“A small group of countries controls the world’s largest reserves of many of the minerals that power modern economies. This map shows the top reserve-holding country for 18 key minerals, from iron ore and copper to rare earths and cobalt.“
What we think
Last week we said that we look forward to the CPI as well as the Personal Income and Spending figures from the US, which will provide insight into the health of the economy and how disposable income is affected by the uptick in inflation.
The CPI figure came out flat compared to the prior figure which was in line with expectations; the quarter-on-quarter GDP growth rate was significantly higher at 2.1%, signalling an overall uptick in spending compared to no growth in personal expenditure.
In the week ahead, we will hear again from the Fed Chair on Wednesday before Non-Farm Payrolls on Friday. The last three releases have far exceeded the forecast and a strong figure on Friday, compared to a forecast of 110,000, could provide support for a stronger Dollar.
Our range for the week: R16.35 to R16.65.
Have a great week ahead.
