Markets WRAP: Rand closes at R14.98/$

The rand closed at R14.98 to the greenback on Thursday.

The day's range was between R14.84 and R15.00.

TreasuryONE said earlier that the rand was the weakest EM currency this week.

The rand broke through the R15/$ level on Thursday afternoon.

TreasuryONE said earlier that the rand had continued to trade at 2019 highs as concerns over the local economy continued to weigh in.

"The rand is the weakest EM this week, with the local unit losing 3% since briefly touching that R14.41/$ mark," said TreasuryONE's Andre Botha.

Botha said the rand had found itself in the same territory as the Mexican Peso, which has been under pressure due to tariff threats by US President Donald Trump.

The rand is still trading at 2019 highs as concerns over the local economy continues to weigh in, TreasuryONE said in a morning note to clients.

The rand was changing hands at R14.86/$ by 11:312.

"The ZAR is the weakest Emerging Market currency this week with the local unit losing 3% since briefly touching the R14.41 mark. Over the past month, the ZAR finds itself in the same territory as the Mexican Peso which has been under pressure due to tariff threats by President Trump and rating agency, Moody’s, changing its outlook to negative.

"Yesterday, President Trump also commented that 'not enough' progress has been made to curb the migration problem which just adds more pressure to the Peso. Equities in the US and Asian markets were little changed as risk-appetite remains low.

"The recent safe-haven play has been beneficial to the price of Gold which is currently trading at $1,330.75. The 10-year US-Treasuries dipped to 2.11% overnight.

"Markets could set these sights on tomorrow’s jobs report in the US for some a fresh injection of momentum. Locally, the ZAR remains under pressure and has tested the 14.90 a couple of times now without a sustainable break above. This could be a key level for a break towards the 15.00 mark."

US futures, Europe stocks climb alongside bonds

Samuel Potter, Bloomberg

US equity-index futures and European shares advanced on Thursday as the prospect of easier monetary policy continued to fuel a stock rebound. The appetite for risk was tempered, however, and government bonds also rose.

Contracts for the three main American equity gauges picked up momentum in the European morning after the S&P 500 notched the biggest two-day rally since January. The Stoxx Europe 600 also rose, as most sectors gained. Automakers were among the laggards after a proposed merger between Renault and Fiat faltered. Shares in Asia were mostly in the red, with the biggest decline in Shanghai despite a cash injection by the central bank.

The yield on 10-year Treasuries slipped to 2.11% as the steeper yield curve showed bond traders positioning for looser monetary policy. There are also lingering concerns for global trade, with discussions between the Trump administration and Mexican officials on tariffs ending Wednesday without agreement.

The euro steadied against the greenback ahead of the European Central Bank’s policy announcement Thursday, with President Mario Draghi under pressure from markets to provide more stimulus.

Terminal users can follow our live blog of the ECB decision. Investor sentiment remains fragile as optimism over looser monetary policy is offset by ongoing concerns over trade. The most recent U.S. tariff threat on Mexico has led several analysts to forecast increased risk of a recession in the world’s largest economy, which could put pressure on the Federal Reserve to cut rates.

“The markets are waiting to hear ‘oh we’re talking again with China’ or some further signalling from the Fed that they are going to do an inoculation for the growth problem,” Alicia Levine, chief strategist at BNY Mellon Investment Management, told Bloomberg TV in New York. “I see this really as a range-bound market for the next few months.”

Meanwhile, in China, the central bank added 500 billion yuan ($72 billion) to the financial system, its second-largest cash injection on record, in a move that may help ease liquidity concerns after a surprise takeover of a local lender.

The nation’s tech-heavy ChiNext stock gauge entered a bear market as the pressures of the trade war, the expected start of a rival board and evaporating investor interest weighed on sentiment.

Elsewhere, West Texas Intermediate crude steadied after entering a bear market following ballooning U.S. petroleum inventories. The peso weakened after Mexico’s credit rating was cut by Fitch and its outlook was changed to negative at Moody’s.