Cross Border Payment and FOREX Specialist

It’s Tuesday, the 4th of July, and while that’s just another day on our calendar it’s also Independence Day in the US which means yesterday was a shortened trading day for them while today is a public holiday.  The result is a sluggish start to the week for the Rand.  

These are the mid rates at 6:30 today:

USD = R18.76 AUD = R12.53
GBP = R23.80 DXY = 103.01
EUR = R20.45Brent Crude = $75.15 per barrel

Not a whole lot to report from yesterday given that the Dollar was dragging its knuckles en route to a day off today.  We opened at R18.79 to the Dollar and hovered in the mid R18.70’s for most of the day except for the briefest of moves to R18.68 which unfortunately did not stick.  We open at R18.76 with limited activity expected for the day.

Gloom-and-doom pessimists who predicted 2023 would be a year of economic misery have been wrong (at least as the second half gets underway). Those who predicted a gradual rebalancing with limited pain have been right. Why it matters: Things could obviously go wrong in any number of ways from here, but so far the immaculate disinflation what had seemed a remote scenario in which inflation comes down without a recession has materialized. That said, it has been slower than ideal, with inflation still tracking well above what most Americans or Federal Reserve policymakers consider acceptable.

The ISM manufacturing index indicates that the sector is in recession, with few signs of a turn any time soon. Construction is doing better, but higher interest rates will bite. With the impact of student loan repayments presenting major challenges for the sector, services will be the area to watch. US manufacturing recession deepens The June US ISM manufacturing index has come in at 46.0, below the 47.1 consensus and weaker than the 46.9 reading from May. This is the worst reading since May 2020 and is the eighth consecutive sub-50 reading (the border between growth and contraction). 

The European Union’s top diplomat will head to Beijing next week for meetings with Chinese officials, a trip that comes as Europe tries to figure out how to manage economic rivalry with China. Josep Borrell will arrive in Beijing on Monday and meet Foreign Minister Qin Gang and other senior figures, according to the EU’s ambassador to Beijing, Jorge Toledo. Toledo told the World Peace Forum in Beijing on Sunday that Brussels would continue to raise “strategic issues” with China, including human rights practices and Russia’s war in Ukraine. 

Indian refiners have begun paying for some oil imports from Russia in Chinese yuan, sources with direct knowledge of the matter said, as Western sanctions force Moscow and its customers to find alternatives to the dollar for settling payments. Western punishments over Russia’s invasion of Ukraine have shifted global trade flows for its top export, with India emerging as the largest buyer of seaborne Russian oil even as it casts about for how to pay for it amid shifting sanctions.

The end of the second quarter saw the UK manufacturing sector remain in contraction territory, with levels of output, new orders and employment suffering further declines. This was despite signs of price and supply chain pressures easing, as client uncertainty and subdued conditions in domestic and export markets continued to weigh on order books. The seasonally adjusted S&P Global / CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) fell to a six-month low of 46.5 in June, down from 47.1 in May. The PMI has signalled contraction in each of the past 11 months.

Italy’s manufacturing sector rounded off a challenging second quarter of the year by registering its worst fall in output since the height of the COVID-19 pandemic in 2020. New orders were down sharply, whilst firms cut back on their purchasing to a severe degree. A lack of demand and a rapidly improving supply-side picture meant that input prices fell at a rate not seen since April 2009. Firms continued to take on additional staff, but growth slipped to a marginal pace as confidence in the outlook fell since May.

The Spanish manufacturing sector closed off the second quarter of the year still in contraction mode amid further signs of demand weakness. Downturns in output and new orders were both sustained, with the rate of decline in the latter the sharpest since January. Firms responded to lower workloads by readjusting their staff numbers, resulting in the first fall in employment levels since last November. Subdued demand also acted to alleviate cost pressures further. Input prices fell at the sharpest rate in over three years and output charges decreased again.

The White House offered measured support for the idea of studying how to block sunlight from hitting Earth’s surface as a way to limit global warming, in a congressionally mandated report that could help bring efforts once confined to science fiction into the realm of legitimate debate. The controversial concept known as solar radiation modification is a potentially effective response to fighting climate change, but one that could have unknown side effects stemming from altering the chemical makeup of the atmosphere, some scientists say.

In The UK, September 16, 1992, is known as Black Wednesday, the day when speculators including George Soros and Stanley Druckenmiller “broke the pound.” This expression is used to describe the moment in time where market forces coalesced to force the British government to exit the European Exchange Rate Mechanism (ERM) by removing its currency from that agreement. Joining the ERM was part of Britain’s effort participate in a single European Currency.