This morning's main headline is the rise in COVID cases in China, which has surely halted the opening of the Chinese economy. This latest kick in the teeth has sent a fresh bout of "risk-off" sentiment through the market, and we saw a stronger US dollar in early morning trade. The US dollar fought back to trade below 1.0250 against the Euro, and with that, we saw EM currencies under pressure this morning. The Rand traded at a high of R17.45 during the day but has slowly but surely crawled back to R17.33 in the afternoon session. We expect the market to drift sideways as we head into the evening session with the calendar devoid of any top-tier data or events. We have seen the events in China cause the Gold price and Brent Crude oil to drift lower. We have seen Brent touching $86 per barrel, which is the lowest since September.
The events around China will enjoy some airtime at the start of the week. The main event for the week is the US FOMC minutes out on Wednesday. The key will be what tone the Fed is maintaining, and should the current hawkish tone hold, and we could see the Rand and other EMs on the back foot. However, we believe any move should be a knee-jerk as a lot has happened since the last Fed meeting, and any major moves in the market will be down to fresh Fed news.
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