Local Currency review

Yesterday, the South African rand strengthened against the majors, after manufacturing activity in South Africa unexpectedly expanded in April. Meanwhile, data indicated that initial jobless claims in the US dropped to its lowest rate since January 2008 last week. Against this backdrop, today’s non-farm payrolls data in the US will be keenly eyed. 
The yield on benchmark government bonds fell yesterday. The yield on the 2015 bond fell to 5.06%, while that for the longer-dated 2026 issue declined to 6.62%.
At 06:00 SAST, the US dollar is trading flat against the South African rand at R8.9471, while the euro is trading 0.1% higher at R11.6986. At 06:00 SAST, the British pound is trading 0.1% lower against the South African rand at R13.8938.
Yesterday, the euro dropped against the major currencies, after the ECB lowered its interest rate by 25 bpts to a record low of 0.5%. Additionally, the ECB President, Mario Draghi, signalled that the central bank could implement negative deposit rates and also noted downside risks to the economy. The British pound climbed against the euro yesterday, after construction Purchasing Managers’ Index (PMI) in the UK rose to a six month high reading in April.
At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.3075, while it has gained 0.1% against the British pound to trade at GBP0.8421.

Thank you Anchor Capital

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