Key points
- This week, as expected, the US Federal Reserve held interest rates steady, supported by a strong labour market; however, future policy will depend on incoming data. Meanwhile, the Bank of England cut rates by 25 basis points to 4.25%, reaffirming that monetary policy will remain restrictive for some time.
- The USD has strengthened on the back of rising Treasury yields, a resilient labour market, and some progress in US trade relations with the UK amid upcoming talks with China, potentially signalling the start of easing trade tensions, which have created upheaval on markets. Investors are cautiously optimistic.
- Domestically, the ZAR has had a good week, outperforming other commodity currencies despite global headwinds. Investor focus is now on South Africa’s upcoming Budget, with hopes that reform-driven measures will support sentiment and contribute towards ZAR resilience.