Rand stable after Powell reiterates Fed’s cautious stance
Federal Reserve chair Jerome Powell’s dovish comments and news of fresh US-China trade talks bolstered emerging-market currencies
The rand was flat against the dollar on Friday morning, although a little weaker against the euro, as traders digested news of fresh US-China trade talks as well as dovish Fed commentary.
US Federal Reserve chair Jerome Powell reiterated in a speech overnight that the world’s most influential central bank would be cautious when raising rates.
Confirmation that high-level talks between US and Chinese officials would begin at the end of January was also supporting risk-on sentiment.
At 9.50am the rand was flat at R13.8438/$ and at R17.6499/£. It was 0.14% weaker at R15.9543/€.
The euro was 0.21% stronger at $1.1524.
The rand has remained somewhat range-bound this week, with the local currency finding support when it broke above the key R14/$ level, analysts said.
Neither local data, nor international developments, have managed to shake the local currency out of its range, and a decisive break below R13.82/$ would be required for this to happen, said Mercato Financial Services analyst Nico du Plessis.
Notwithstanding a host of risks, there was a “small window of opportunity” for the local currency to appreciate against the dollar in coming weeks, he said.
Risk factors on Friday include US consumer inflation data, due at 3pm. The release will be closely watched as markets consider the dovish tone recently struck by the Fed.