Rand enjoys positive sentiment before Fed
The Rand has been on the front foot for most of the day as the local unit trades at R17.23 against the US dollar. Whether the move is a bit of positioning before the Fed remains to be seen, but the Fed is the main course this evening. We did see the US dollar a little bit weaker after the ADP number disappointed, which in turn only helped the Rands cause. The Euro was also trading stronger as Eurozone inflation rose by less than expected at 8.5% vs. the 8.9% expected.
All eyes turn to the Fed
The main event for the week is tonight's US Fed interest rate decision. The expectation is for the Fed to hike interest rates by 25 basis points; however, there are some rumours that the Fed could go 50 basis points. The market will wait for the speech by Fed Chair Powell and whether the Fed will stay hawkish in its approach. The tone of the Fed will play an important role in the direction of the market after the Fed decision. Tomorrow we have the ECB, and it is expected that the ECB will hike rates by 50 basis points as it tries to battle inflation. The fact that the ECB is still amid an extreme hiking cycle could work in favor of the Euro tomorrow. Expect volatility to ramp up as we head into the weekend.
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