
Week Ahead: SARB to keep repo rate unchanged at 7.0% but likely to adopt a more dovish policy stance
14 Jul 2017
The broad gains in emerging market currencies this week were partially supported by the market interpretation of a less hawkish Fed, following Fed Chair Yellen’s testimony to Congress.
Yellen noted that “with inflation continuing to run below the Committee's 2 percent longer-run objective, the FOMC (…) intends to carefully monitor actual and expected progress toward our symmetric inflation goal.” The testimony signaled a gradual pace of policy normalisation. Indeed, today’s release of US CPI for June disappointed expectations, with core CPI decelerating to 1.7% y/y, the lowest since January 2015. The rand appreciated by over 2% since Monday to 13.03/USD presently, realising the second best weekly spot returns out of 24 emerging market currencies.
The rand is expected to trade in a range of R13.55/USD – R12.55/USD, R15.40/EUR - R14.40/EUR and R17.45/GBP - R16.45/GBP.
The rand is expected to trade in a range of R13.55/USD – R12.55/USD, R15.40/EUR - R14.40/EUR and R17.45/GBP - R16.45/GBP.