The JSE opened weaker on Thursday as the market sought direction from a firmer rand‚ which in unusual trade gained on the dollar‚ despite the US Federal Reserve reaffirming a hawkish stance.
The Fed hiked interest rates by an expected 25 basis points on Wednesday and pointed to a potential rise at its December meeting‚ with the likelihood of three increases in 2019.
This should have benefited the dollar‚ but the euro lost ground only slightly to below the $1.17 level‚ before bouncing again to trade at $1.1709 at the JSE's opening.
The rand was at R14.1492 to the dollar from R14.1348‚ the best level since August 28. It was at R14.35 on Tuesday.
Oanda analysts said the US federal open market committee (FOMC) played verbal gymnastics with the market by removing the term "accommodative" from its statement.
"Accommodative" refers to when rates are still lower than consumer inflation‚ while "neutral" means it is level with inflation. Hiking above neutral would be hawkish.
Consumer inflation in the US is about 2% at present‚ with the federal fund rate after Wednesday's hike rising to between 2% and 2.25%.
According to Oanda the removal of the term "accommodative" was a clear sign "that the FOMC was detouring into a hawkish direction with the rate outlook". However‚ Fed chair Jerome Powell poured cold water on this view at a media conference after the release of the statement‚ causing markets and currencies to reverse course toward a risk-on stance.
