US Job Data Weakens, Rate Cut Expectations Rise – Impact on the Rand

The latest weekly market update from TreasuryONE and ETM Analytics focused on the weaker-than-expected US non-farm payrolls data released on Friday. Employment growth fell sharply, with only 22,000 jobs added versus expectations of 75,000. The June figures were also revised into negative territory, highlighting labour market weakness. This development has strengthened expectations of an imminent US interest rate cut.

Markets now price in an 85–90% chance of a rate cut at the upcoming Federal Reserve meeting. While speculation about a larger 50 basis point cut has surfaced, inflation pressures—partly driven by tariffs—make a smaller 25 basis point cut more likely. Gold prices surged above $3,600 an ounce on the back of these developments, while the US dollar came under renewed pressure.

The weaker dollar has supported the rand, which has benefited from both currency flows and ongoing carry trade attractiveness. Although South Africa’s gold mining sector no longer contributes at historical levels, the higher gold price still adds some support to the country’s trade balance. At the same time, global investors continue to favour rand-denominated bonds, further strengthening the local currency.

Looking ahead, upcoming US inflation data will be a key driver for markets. While a September rate cut appears almost certain, the size and timing of further moves remain uncertain. For now, the rand continues to trade firmly within its established 17.50 to 18.00 range, with potential to test the lower boundary if risk sentiment remains supportive.