South African Rand Steadies as Fed Rate Hike Bets Ease
The South African rand traded relatively stable against the US dollar, euro, and British pound as investors continue to assess developments surrounding the reopening of the Strait of Hormuz while digesting softer US inflation data.
The South African sovereign unit traded at R16.16/dollar, R18.61/euro, and R21.79/pound, according to a brief from First National Bank (FNB) stockbroking and portfolio management.
Analysts said with US consumer inflation coming in as expected and easing slightly, markets have pared expectations of a near-term Federal Reserve rate hike, providing support for emerging-market currencies.
Gold prices are little changed at $4,398 per ounce on Thursday, holding near ten-week highs after softer US inflation reduced pressure on the Federal Reserve to tighten monetary policy in the near term.
Ongoing uncertainty surrounding the Strait of Hormuz, together with continued central bank demand, has helped underpin bullion prices despite some profit-taking following recent gains.
Oil prices were softer as weaker demand expectations offset ongoing concerns about disruptions to global energy supplies.
FNB said while negotiations between the US and Iran remain deadlocked and shipping through the Strait of Hormuz remains constrained, recent demand forecast downgrades from OPEC and the IEA, together with a sizeable increase in US crude inventories, have prompted investors to reassess the sustainability of recent price gains.
Brent crude price dipped slightly to $88.69 per barrel, and US WTI hovered at $83 amid robust US inventories and a softer-than-expected consumer price (CPI) print.
US consumer price inflation data showed continued moderation in July, giving markets fresh hope that the Federal Reserve (Fed) may have room to resume monetary easing should price pressures continue to normalise.
CPI rose 3.4% year-on-year (y/y), down from 3.5% in June and continuing to cool from May’s peak of 4.2%. On a monthly basis, headline CPI edged up 0.1%, rebounding modestly from June’s energy-led 0.4% drop, in line with market consensus. Nigerian Naira Extends Rally as Corporates’ FX Demand Reduces
