The South African rand started the new week on the back-foot, trading more than 6% weaker to the US dollar. Up until now the rand has been one of the best performing emerging market currencies this year – but it has now given back most of its gains.
Comments from the chair of the US Federal Reserve (FED), Jerome Powell, regarding the possibility of three consecutive half-point increases in US interest rates, resulted in more pressure on the local currency.
China is making headlines as their Covid-19 outbreak has worsened. With Shanghai recording a record daily number of deaths in the current outbreak, the world’s second largest economy now has certain cities entering their fourth week of hard lockdowns. China has imposed a zero-tolerance approach to the pandemic, causing concerns as to the effects it may have on the global economy.
Locally, South Africa is also seeing an increase in Covid-19 numbers as a fifth wave looms, driving negative market sentiment.
Looking at the week ahead; key economic data including the local Consumer Price Index (CPI), Produce Price Index (PPI) as well as US earnings numbers are expected during the week.