Thursday , October 28 2021

Markets IN LIVE: How Rand could face US semicirents. UU


RMB's head of research, Nema Ramkhelawan-Bhana, weighs in the middle of the United States:

"A house divided against itself can not bear." It is remarkable that a feeling expressed by Abraham Lincoln – who, incidentally, was elected as the 16th president of the United States. UU. On this same day more than a century and a half ago, it is still applicable to modern America.

In addition to the history lesson, we think of the iconic date, as Americans go to the elections today to elect Congressional officials in a highly polarized political environment.

The results, as we said yesterday, are quite predictable: Democrats should take control of the house while Republicans retain their power in the Senate.

If Congress is really divided, Trump will not be easy to make your wish list about healthcare, immigration and economy, since Democrats use every opportunity to weigh the Republican's actions against constitutional standards.

That does not mean that all Trump policies will be rejected: Democrats would not have numbers to repeal certain measures, such as tax cuts and restore the key parts of Dodd-Frank's financial regulations.

The markets would be kindly seen in a blockade in Washington, as they would reduce the risk of radical policies and regulatory changes, which would favor risk assets: the lira and the rand were the obvious beneficiaries.

After opening at 14.15, USD / ZAR could prove its September low at 2:00 p.m. if the intermediate terms came out as expected.

But investors seem to have adopted an approach to wait and see to protect themselves against the unknown.

A republican surprise in both cameras could empower Trump to take stronger commercial measures, stimulate the strength of the US dollar and increase the volatility of asset prices.

This would surely reinforce a downward trend in EUR / USD, which is falling to 1.14. Even the terms of EE were planned. The euro will lower the pressure based on the fundamental weakness, since the measures of the PMI for the euro zone, due to this morning, probably reaffirm the deceleration of the activity that had prevailed throughout the region, increasing the fears of further growth Gross GDP.

There are no SA data scheduled for today's release and maybe so lucky, after the overstated PMI printing of yesterday.

The index fell for the fourth month in a row to 46.9 in October, from September 48, with its lowest reading since July 2014, underlining the weakness of the economy.

Adding the disappointment is the announcement that the price of gasoline will increase in fact this week despite the strength of Rand and the decline in oil prices last month, as the Central Energy Fund recovers losses from the government intervention it did in September. An overloaded consumer, combined with a slight production growth, does not forecast good year-round GDP estimates.

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