By Andre Botha, Senior Dealer, TreasuryONE
The Reserve Bank’s bi-annual monetary policy review presented yesterday painted a dismal picture of the economic outlook for the country. The SARB cut its growth forecasts for 2020 and 2021 due to the impact of the COVID-19 pandemic and the current lockdown. The economy could contract by as much as 4.0% this year and is unlikely to grow by more than 1.0% in 2021. The central bank further expects up to 370 000 jobs to be lost and 1 600 business insolvencies.
Despite all of this, the Rand staged a big comeback from the record weakest level of 19.3446 yesterday morning to touch 18.5169 in New York last night. This morning we are trading unchanged from last night’s 18.6736 close. The Dollar is a touch softer versus the Euro but firmer against the Pound. The Aussie Dollar jumped 1.1% this morning as the RBA kept rates on hold and said they may taper if conditions improve.
News of the slowing of new Coronavirus infections in Asia and Europe buoyed global equity markets with Wall Street gaining over 7.0% overall three major indices and the FTSE up 3.08%. Asian markets are all in the green this morning, however, US futures are trading marginally down. The JSE managed a 3.29% positive close yesterday.
All eyes are Thursday’s OPEC+ meeting to see whether there will be an agreement on production cuts. The Oil price has climbed to $34.05 this morning as markets anticipate a positive outcome. Gold remains firm at $1 662.32 this morning.
