Rand steady as Fed cut bets fade

Daniel Fowler
July 9, 2019

"There is no great urgency for the Fed to act, and surely not by the half a percentage point move", said Marc Chandler, chief market strategist at Bannockburn Global Forex.

"Foreign-exchange markets started the week on a quiet note, with currencies trading in tight ranges, as traders shifted their focus from Friday's strong US payrolls data to testimony from Federal Reserve Chairman Jerome Powell", said Ellis Phifer, senior market strategist at Raymond James.

"We're kind of in middle ground here with a real contemplation of would you rather have a rate cut or an improving economy", Hogan said. Rosenblatt Securities downgraded the iPhone maker's shares to "sell" from "neutral", and said it expected the company to face "fundamental deterioration" in the next six to 12 months.

A better-than-expected jobs report last Friday has dimmed hopes for more easing momentary policy by the USA central bank. The Dow Jones Industrial Average slid 0.4% to 26,806.14.

A currency trader walks by the screens showing the foreign exchange rates at the foreign exchange dealing room in Seoul, South Korea, Monday, July 8, 2019.

Money market futures are still fully pricing in a 25 basis point (bps) cut at the Fed's next policy meeting on 30-31 July, but have nearly priced out a larger 50 bps reduction.

Trading is expected to be subdued ahead of Powell's semi-annual testimony to the US Congress on Wednesday, which will provide further clues on the near-term outlook for monetary policy.

Six of the 11 primary S&P 500 sectors traded lower around market close, with the communication services sector down over 0.8 percent, leading the laggards.

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The focus now shifts to the Fed Chair Jerome Powell's scheduled speech.

Elsewhere, a rising dollar pushed the British pound down to a fresh six-month low of $1.2480, the lowest since the "flash crash" on January 3 when the pound dropped to $1.2409.

Boeing Co's (BA.N) shares declined 1.5% after Saudi Arabian budget airline flyadeal said it would not proceed with a provisional $5.9 billion order for the planemaker's grounded 737 MAX aircraft, instead opting for a fleet of Airbus A320 jets.

Symantec Corp SYMC.O rose 2.8% after Jefferies said the cybersecurity firm is a "logical financial acquisition" amid reports Broadcom Inc AVGO.O is in advanced talks for a deal.

Declining issues outnumbered advancers for a 1.72-to-1 ratio on the NYSE and for a 2.15-to-1 ratio on the Nasdaq.

"The results for S&P 500 companies are expected to be underwhelming. investors are likely to look beyond the uninspiring headline number", Jonathan Golub, chief USA equity strategist at Credit Suisse said.

Volume on USA exchanges was 5.74 billion shares, compared to the 6.77 billion average for the full session over the last 20 trading days.

Apple's suppliers, such as Murata Manufacturing and Taiyo Yuden, fell 2% and 4%, however, after Rosenblatt Securities cited a "fundamental deterioration" for the USA gadget giant over the next 6-12 months.

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