Emerging market currencies remain under pressure, led by the Turkish lira. Turkey has its problems, not unlike South Africa, except in its case the President is trying to put pressure on the central bank to lower rates even as the country faces serious current account deficits. As we know, political interference in central bank decisions rarely end well. Of course, the undercurrent of looming trade wars is not helping sentiment.


Then of course, our Finance Minister warned yesterday that local government finances in South Africa are in a pitiful state, which spooked sentiment toward the rand a little. The rand has hence struggled of late, reaching levels of  12.0200 -12.1500 to the US dollar, where some export supply capped further weakness.


My best guess is that emerging markets will continue to struggle for the immediate future and I would imagine that US dollar buyers will re-emerge at the psychological level of R12.000. Equities have stabilised somewhat, but remain nervous for any more moves between China and the U.S.


Markets will focus on upcoming inflation data out of the US, which will set the tone for future rate increases from the Federal Reserve. A softer CPI print will perhaps mean a slightly slower trajectory for the Fed (which would be positive for emerging market sentiment) whilst a sustainable move above 2% will make markets nervous.


Oh and – Semi finals baby YNWA!