Rand pushes towards R13.90/$ after dovish Fed testimony
The rand pushed to its best level against the dollar in three months on Thursday morning, eyeing R13.90/$, bolstered by the prospect of loose monetary policy from the world’s most influential central bank.
US Federal Reserve chair Jerome Powell on Wednesday reinforced the expectation of interest rate cuts at the Fed’s July meeting, boosting risk assets across the globe.
The market is now pricing in the chances of a 50-basis-point cut at 25%, said London Capital Group senior market analyst Ipek Ozkardeskaya in a note. Before the speech, the odds had been 5%.
At 9.24am the rand was 0.295% firmer at R13.9435/$, 0.12% stronger at R17.4711/£ and 0.13% up at R15.7132/€. The euro had firmed 0.16% to $1.1269.
The rand is now eyeing R13.90/$, but it could face some resistance, said TreasuryOne senior currency dealer Andre Botha in a note.
“Sentiment has shifted to risk assets again in the short term, but with little in the way of emerging markets to back up the latest risk-on rally, momentum could be hard to maintain.”