Markets are positioned for a 25 basis points cut from the Federal Reserve tonight at 8pm South African time, which will shift the US rate to 4.25%. The prospect of cheaper money has lifted US equities, with the S&P 500 up 17% this year to a record 6,615, almost 30% above its April 2025 bounce point.

Expectations of lower interest rates in the US have encouraged investors to seek out higher-yielding assets, which has contributed to the dollar index dipping nearly 10% since January and now trading below 98 index points. The rand, which mirrors the dollar’s movements, could gain if the greenback continues to soften. Bheki Mahlobo told The Common Sense that "if the dollar remains under pressure the rand may strengthen toward R17.00, its firmest level since September last year".

Still, with uncertainty about the trajectory of the US labour market, the Fed may choose to strike a cautious tone at Thursday’s meeting and stress that any further rate cuts will depend on clear evidence of economic cooling.

This sets up a risk that investors, now conditioned to easier money, could be disappointed if the Fed pushes back against hopes for an extended cycle of cuts. For now, equity gains and a sliding dollar reflect market optimism, but the central bank’s messaging will determine whether this momentum endures.