Global Economic Uncertainty and Rand Outlook | Weekly Market Review 14 Oct 2024

In this week’s market review, TreasuryONE’s currency strategist, André Cilliers examines recent data on U.S. inflation, global economic forecasts, and their effects on currency markets. U.S. inflation continues to trend lower, but not as significantly as markets anticipated, raising doubts about aggressive rate cuts by the Federal Reserve. While a 25 basis point cut remains the likely scenario, the Fed is taking a measured approach in managing inflation and growth, responding cautiously to recent economic data and labour conditions.

In Europe, recession risks loom, especially as Germany’s economic outlook continues to weaken. The European Central Bank is expected to focus on growth, potentially adopting more aggressive rate cuts to counter stagnant demand and support struggling industries. Meanwhile, China’s anticipated GDP report underscores the country’s economic slowdown, with limited growth expected amid deflationary pressures. Market concerns about global economic growth are also heightened by ongoing geopolitical risks, particularly in the Middle East, which could affect oil prices and inflation.

Locally, the South African Rand has remained steady, buoyed by domestic factors like stable power supply and positive trade balances. However, international developments are likely to impact the Rand in the coming months, as shifts in global currency values and central bank policies take precedence over domestic influences. Although the Rand currently holds within a stable range, TreasuryONE emphasizes the importance of monitoring global economic and policy shifts.

As the final quarter of the year begins, volatility in the global economy is expected to rise, driven by U.S. elections, Middle Eastern tensions, and fluctuating global growth indicators. TreasuryONE anticipates a “wait and see” period, with careful attention to developments in international markets and their potential impact on the Rand and local markets.

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