Traders prepare for decision on record-level rate hike
4 May 2022
Traders are awaiting the Federal Reserve's May monetary policy meeting tonight which will likely set the stage for the first 50 base point rate hike since 2000 and for the central banks to soon start to announce quantitative tightening
Source: 123RF
The rand in the meantime, has recouped all of Monday's losses as it closed 2.3% stronger at R15.77 yesterday.
Rand update
The rand was initially supported by a softer dollar but managed to hold on to its gains even after the dollar rebounded against the euro and pound late last night. This morning, the rand is trading unchanged at R15.77 in a very quiet Asian trading session ahead of the FOMC decision later today. The local currency has also gained strongly against both the euro and pound and is currently quoted at R16.59 and R19.68, respectively.
Commodity update
A better day for metals yesterday with modest gains for Gold and Palladium while Platinum performed best, ending nearly 3.0% stronger This morning sees Gold flat at $1,864, Platinum up further at $967, and Palladium up at $2,260. Brent crude closed lower at $105.00 last night and is holding fairly steady this morning at $106.00.
International update
The dollar lost some of Monday's gains in the European trading session yesterday but later bounced back in US markets as traders await the Fed FOMC tonight. With a 50bp rate hike being an almost certainty, the main focus will be on the FOMC statement after the announcement, with investors looking for any changes to the Fed's future rate-hiking trajectory.
The DXY index is currently holding steady at 103.50, with the dollar trading at 1.0517 against the euro and at 1.2478 against the pound. US Treasury yields are up this morning, with the 30y-yield at 3.01%, the 10y-yield at 2.98%, and the 5y-yield at 3.03%.
Wall Street closed slightly firmer on a day of subdued trading as investors sit on the sidelines for now.
US futures have opened relatively flat this morning while Asian stocks are mixed. The Shanghai continues to show strong gains, but the Hang Seng and the Nikkei are down on the day.
About Andre Cilliers
Andre is the Currency Risk Strategist at TreasuryONE. Andre's career in treasury spans more than 30 years. He has gained his extensive currency risk experience in both the banking and corporate arena. Before joining TreasuryONE, Andre headed up the treasury department for a Tier One German international bank in South Africa.
