Rand rallies before FOMC
Hours before the FOMC meeting, we have seen the US dollar trading near the 1.0800 level against the Euro. Whether this level will hold after the meeting is another matter. We expect the FOMC to hike interest rates by 25 basis points, citing the latest banking crisis in the US as one of the reasons why the FOMC will not go 50 basis points.
The market will pay more attention to the forward guidance by the FOMC as the market will look to any news on a Fed pivot. Should the tone be dovish, we could see the EM markets on the front foot, but should a hawkish tone be struck, the market could turn risk-off very quickly.
The Rand rallied in the late afternoon, gained more than 1% on the day, and is currently trading at R18.32, but the FOMC holds all the risk tonight. Local inflation came out at 7% year-on-year for February, slightly above the 6.9% expectation. Tonight’s FOMC meeting is likely to have more influence on the Rand.
#FOMC #Markets #ZAR
