Rand strengthens a bit as hopes rise about a US-China trade deal
US treasury secretary Steve Mnuchin has offered reassurances that the US and China are closing in on a deal, boosting risk assets
The rand was a little firmer against major global currencies on Wednesday afternoon, taking comfort from some positive commentary regarding the US and China reaching a trade deal soon.
At 2pm the rand had firmed 0.18% to R14.3247/$, 0.25% to R16.2725/€ and 0.25% to R18.165/£. The euro was flat at $1.1359.
The benchmark R186 government bond had weakened, with the yield rising two basis points to 8.175%. Bond yields move inversely to bond prices.
US treasury secretary Steve Mnuchin said earlier the US China were “90% done” with a trade deal, providing a little more risk appetite on global markets.
While Mnuchin’s comments were not new, investors were taking it as a positive sign ahead of the Group of 20 (G20) summit this weekend, said BK Asset Management MD of foreign-exchange strategy Boris Schlossberg in a note.
“The Trump administration is clearly keen to generate positive optics off the G20 summit, with Trump no doubt eager to produce a deal that he can take to the voters next year,” Schlossberg said. “That's why US rhetoric has turned far more friendly and markets are beginning to respond in kind.”
The rand is expected to remain range-bound ahead of the summit, as the US-China trade war remains a dominant market theme.
US Federal Reserve policy is another, with chair Jerome Powell tempering market expectations on Tuesday night of accelerated easing.