South African Rand Weakens as U.S. Dollar Index Rebounds
South African rand weakened against crosses in the forex market on Tuesday as global market dynamics continue to favour the dominant currency, the US dollar.
The dollar index hovered near 100 after rebounding in the previous session, as investors continued to evaluate the outlook for Federal Reserve monetary policy amid ongoing uncertainty in the Middle East.
Markets are currently pricing in about a 65% chance of a 25 basis point Fed rate hike in September after the central bank left interest rates unchanged in July.
The rand is slightly weaker as stronger-than-expected US manufacturing data supported the US dollar and reduced expectations of near-term interest rate cuts, First National Bank (FNB) stockbroking and portfolio management subsidiary said in a brief on Tuesday.
Investors are also awaiting further US employment data due out this week for additional clues on the Federal Reserve’s policy outlook. The Bank said the rand is trading at R16.51 to the dollar, R19.00 to the euro and R22.16 to the pound on Tuesday.
Trading around $84.88 per barrel, oil prices have rebounded after sharp losses in the previous session, as conflicting signals from the US and Iran raised doubts about the prospects of a near-term agreement regarding the Strait of Hormuz.
However, gains remain limited by expectations of higher OPEC+ production and an unexpected build in US crude oil inventories. At $4,063 per ounce, gold prices are marginally higher as investors balance ongoing uncertainty surrounding developments in the Middle East against expectations that US interest rates may remain higher for longer following resilient economic data. Prices of Oil Fall as Markets Reprice Supply Risk -Weekly Update
