Rand enjoys some support as investors eye Fed dovishness

The rand and other emerging-market currencies received some support as the dollar was put under pressure due to growing speculation that the US Federal Reserve may cut interest rates in 2019. 

“Investors are now shifting their focus towards central banks. Expectations of a Fed rate cut increased following an unexpected contraction in the US manufacturing sector and following comments from the Fed’s James Bullard on Monday” said London Capital Group’s head of research, Jasper Lawler. “The St Louis Fed president said that a cut to interest rates ‘may be warranted soon’ given the trade risks and muted inflation.”

At 9.35am, the rand was 0.24% stronger at R14.4071/$ and 0.15% at R18.2619/£, while it was little changed at R16.2332/€. The euro was 0.22% firmer at $1,1267.

The benchmark R186 government bond had strengthened, with its yield falling four basis points to 8.37%. Bond yields move inversely to bond prices.

Gold had gained 0.24% to $1,327.64/oz, nearing a three-month high and platinum was flat at $824.04.

Brent crude was up 0.82% to $61.24 a barrel. 

SA’s GDP figures for the first quarter of 2019 are expected later in the day. Analysts expect a contraction of 1.6% for annualised GDP, according to a Bloomberg consensus.