In this week’s market review, TreasuryONE’s currency strategist André Cilliers discusses the temporary reduction in tariff tensions between the United States and China. Following weeks of escalating trade disputes, both countries agreed to a 90-day period of reduced tariffs, with the US scaling back from 145% to 30% and China lowering their tariffs from 125% to 10%.
While markets welcomed this short-term relief, Cilliers cautioned that no formal agreements have been finalised, and future uncertainties remain. Investors are now closely monitoring upcoming US inflation data, as potential price increases due to tariffs could significantly impact future monetary policy decisions by the Federal Reserve. Inflation is anticipated to slightly exceed the 2% mark this week, but current figures may not fully reflect the potential longer-term inflationary effects of tariffs.
Regarding US monetary policy, despite market expectations of rate cuts later this year, the Federal Reserve faces pressure from President Donald Trump to lower interest rates. However, with ongoing tariff uncertainty, the Fed is likely to remain cautious, considering future inflation risks before making any decisive moves.
On the domestic front, the South African Rand has performed steadily, trading firmly within its familiar range of R18.00 to R19.00 against the US dollar. Stability in the Government of National Unity (GNU) and anticipation of the forthcoming interest rate decision by the South African Reserve Bank (SARB) are supporting the Rand. Investors will also closely watch the S&P credit review expected this Friday and the third budget presentation set for next week, hoping for signs of greater fiscal coherence.