South Africa’s rand firmed almost 1% on Monday morning, to below the psychological R18 mark against the US dollar, which took another ‘Trump uncertainty’ hit following the firing of the US labour statistics boss on Friday.
The rand firmed to R17.98 at around 9:20am SA time, after trading in the R18.15 range late on Sunday and weakening above the R18.30 mark in early trade on Friday after SA secured no trade deal with the US to avoid 30% tariffs.
Read: Trump fires labour statistics boss
“The rand initially fell heavily on Friday on the back of the 30% tariff announcement, hitting R18.35 at one point, but recovered sharply later as the dollar weakened on the back of the payrolls number,” Andre Cilliers, currency strategist at TreasuryONE, highlighted in a note on Monday.
“The rand closed at R18.05 and is consolidating around [R18 around 10am] as the Department of Trade and Industry makes a last-ditch effort to negotiate a better trade deal.
“President [Cyril] Ramaphosa is also scheduled to have a telephone call with [Donald] Trump this week to discuss the tariffs,” he added.
“The US dollar opened “relatively flat after Friday’s massive selloff,” Cilliers noted.
“The dollar has started the new trading week largely unchanged from Friday’s weaker closing levels. The weak US payrolls data and massive downward revisions for both the May and June totals have seen US bond yields rally as rate cut bets rise.
“The two-year bond yield is down at 3.70% versus Friday morning’s 3.96% while the 10-year yield has fallen to 4.24% from 4.38%. The DXY index, which opened at 100.01 on Friday, currently sits at 98.75 with the euro quoted at 1.1580, the pound at 1.3280, and the yen at 147.85. The weak data has seen Trump ramp up his criticism of the Fed for not cutting rates,” he said.
Read: Trump urges Fed board to ‘assume control’ if rates not cut
Meanwhile, like the rand, other emerging-market (EM) currencies rallied after the weaker-than-expected US jobs data prompted traders to price in Federal Reserve rate cuts, driving the dollar lower.
The MSCI’s EM currency gauge rose 0.5% on Monday, the most in more than a month.
The Bloomberg Dollar Spot Index was little changed after sliding 0.9% in the previous session. The Philippine peso and Malaysian ringgit outperformed with gains of about 1% against the greenback.
Emerging-market assets are getting a reprieve after being pressured last week by a slew of new tariffs announced by President Trump. The MSCI currency index fell for six straight sessions before Monday’s rebound. Investors are betting that the Fed may lower interest rates as soon as next month, following the surprise weakness in US payroll data.
“If the Fed resumes rate cuts in September and signals a more dovish policy stance, it could potentially offer support to Asian currencies,” MUFG Bank’s currency strategist Lloyd Chan wrote in a note.
Risks for the regional FX might come from the implementation of higher US tariffs that could weigh on exports, he added.
Sentiment was subdued for equities after Friday’s sharp retreat on Wall Street – sparked by rising US unemployment and slower job creation. Stock benchmarks in Indonesia, the Philippines and Malaysia all fell, but the MSCI EM equity benchmark edged up 0.3%, boosted by South Korean and Chinese tech heavyweights.
The JSE also saw a bounce back on Monday, trading almost a percent stronger.
Just before midday, the JSE/FTSE All Share Index traded at around 98 719 points, with Purple Group, Pan African Resources, MTN Group, and MultiChoice Group hitting 52-week highs.
