Two days to go

David van Rooyen must be feeling a bit embarrassed. His four-day term as South Africa's finance minister cost the rand nearly a tenth of its value. Since his dismissal yesterday the rand has strengthened by 5%. It won’t look great on his CV.

Investors did not think much of Mr van Rooyen, as they made clear on Wednesday as they began to dump the rand when they heard of his appointment.  They have rather more time for his replacement, Pravin Gordhan, not least because when he held down the same job between 2009 and 2014 he made a decent fist of it. The rand is the top performer over the weekend. However, despite this morning's recovery it would be ambitious to expect the rand to carry on higher as a result of Mr Gordhan's return. The currency is expected to feel the heat when US interest rates move higher.

The weekend's back marker is another exotic currency, the Chinese yuan, which has been marked down to a four-year low against the US dollar. The authorities in Beijing have announced that they will in future allow it to track a basket of currencies rather than linking it only to the dollar. It is not clear whether or not this is a step towards liberating the yuan to float freely but, either way, it probably means further weakening.

Risk off
There is little doubt that investors are becoming twitchy ahead of this Wednesday's expected interest rate increase by the US Federal Reserve. Global equity prices are mostly lower on the week, oil prices are at seven-year lows and gold is close to a four-year low. The commodity dollars fared badly on Friday.

The Australian, Canadian and NZ dollars are all down by -1.0% from their positions on Friday morning and the Norwegian krone is down by almost that much as a result of cheaper oil. Among the major currencies the safe-haven Japanese yen is at the head of the pack with a half-yen lead over sterling but the pound is there or thereabouts, up by two thirds of a US cent and a quarter of a euro cent.

Another cause for concern is the decision by Third Avenue, a US investment manager, to liquidate its high-yield (junk) bond fund on Friday, citing lack of liquidity as the reason. The fear is that a lack of liquidity could weigh on a broader range of assets once US interest rates start to move higher.

Waiting for Janet
There are no significant economic statistics on today's agenda. That will leave more than enough time for investors to speculate about Wednesday's Federal Reserve rate decision and how it will affect currency markets.

One school of thought is that a 25-basis-point increase in the Federal Funds rate is already priced into exchange rates. The other has it that Wednesday will mark the end of the phoney war and the ordure will hit the flabellum.

They can't both be right.