The South African rand gained nearly 1% on Monday morning, dropping below the significant R18 mark against the US dollar. This movement came after uncertainty arose following the dismissal of the head of US labor statistics on Friday.
By around 9:20 am SA time, the rand had improved to about R17.98, recovering from a late Sunday range of R18.15 and surpassing R18.30 during early trading on Friday, after South Africa was unable to secure a trade agreement with the US that would avert 30% tariffs.
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“The rand faced a notable drop on Friday due to the 30% tariff news, hitting R18.35 at one point, but it later recovered as the dollar weakened following the payroll data,” commented Andre Cilliers, a currency strategist at TreasuryONE, in a note on Monday.
“The rand closed at R18.05 and is currently stabilizing around R18 as the Department of Trade and Industry makes one last push to negotiate a better trade agreement.
“President Cyril Ramaphosa is also set to have a conversation with Trump this week to address the tariffs,” he added.
The US dollar opened “relatively stable following Friday’s notable sell-off,” Cilliers noted.
“The dollar has commenced the new trading week largely unchanged from Friday’s weaker closing levels. The disappointing US payroll data, combined with significant downward revisions for both May and June figures, has caused US bond yields to rise as expectations for rate cuts grow.
“The 2-year bond yield has decreased to 3.70%, down from 3.96% on Friday morning, while the 10-year yield fell to 4.24% from 4.38%. The DXY index, which opened at 100.01 on Friday, now stands at 98.75, with the euro at 1.1580, the pound at 1.3280, and the yen at 147.85. The weak data has led Trump to ramp up his criticisms of the Fed for not cutting rates,” he said.
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