Daily Market Report 12 Sep
Bets on only 25bps rate cut rise on the back of sticky core inflation
Headline US CPI fell to 2.5% in August, in line with market estimates but markets took their cue from the higher-than-expected core inflation data which dashed hopes of a bigger 50bps rate cut by the Fed next week. US Treasury yields moved higher in the near end of the curve and the Dollar closed firmer last night. This morning, we have the DXY index up at 101.77, with the greenback quoted firmer at 1.1016 against the Euro, 1.3049 against the Pound, and 142.85 against the Yen. Today we have the ECB interest rate decision with the bank expected to cut rates by 25bps. Equity markets in the Far East as well as US futures are all positive this morning, following Wall Street’s strong close last night. The Rand weakened up to R17.98 levels post the US CPI data yesterday before closing at R17.88 last night. The local currency is currently trading unchanged in an extremely quiet Asian trading session, and we expect the Rand to remain range-bound in the short term. There are some concerns surfacing around the GNU, which could impact the Rand going into next week after the Presidency announced that the BELA bill will be signed into law on Friday despite strong objections from the DA.
Gold firmer, Palladium back above $1,000, and Brent crude rises
Gold slipped towards the $2,500 yesterday after the US CPI data pushed the Dollar stronger but the price has recovered this morning and currently sits at $2,519. Palladium broke above the $1,000 mark yesterday and is trading up a further 1.4% at $1,023 this morning. Brent crude has climbed up to $71.23 this morning, driven by the possible disruption to US supply due to Hurricane Francine.
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