 MyCURRENCY News for week 19 

 		 

		     

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Week 19

What we know 

It’s becoming increasingly challenging to write these weekly
commentaries, in a market where the Rand will sell off 4% - 5% in a
fortnight, only to fully recover the following fortnight and then
repeat this pattern over and over. In other words, apparent periods of
strength or weakness are frequently simply the result of the unwinding
of the previous period’s losses or gains, rather than being
particularly newsworthy in and of themselves. 

 

It’s been a year or two in which we’ve constantly had to repeat
the fact that, for the time being, the short- and medium-term moves in
the ZAR.USD are being predominantly determined by the fortunes of the
USD itself, rather than having much to do with South Africa’s
political, economic or social conditions. In turn, USD trading is
being largely dictated by the market’s outlook regarding the timing
and scale of the Fed’s interest rate cutting cycle, a view which
chops and changes continuously in response to the bullishness or
bearishness of economic data releases. Outside of this, current global
geopolitical tensions and changes, may also be providing an underpin
to the USD, as is often seen in times of uncertainty and risk
aversion.  

 

The net result is that the Rand has closed every week since the start
of August 2023 (9 months) within an 18.25 – 19.35 range against the
USD. Given how much volatility we’ve seen during that time it’s
fair to suggest that this 6% difference between the high and low
closes may be surprisingly small for many. 

 

Locally, while much focus is on the election in 3 weeks, in the
absence of any inflammatory or controversial electioneering the market
doesn’t appear to be positioning itself one way or the other,
perhaps a sign that expectations are for nothing too different from
what we’ve become used to since Cyril limply took over the reigns in
2018. At least the near miraculous (and not at all coincidental)
pre-election absence of load-shedding continues to bring some early
winter cheer.  

		       

		
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What others say 

		       

__

_
_
_DAILY MAVERICK
[https://cure-zgpvh.maillist-manage.net/click/1493f4796a34fe79/1493f4796a34cb41] - _Food
prices beginning to stabilise, says Competition Commission

"While lower food inflation is a positive sign, the commission said
food prices were still rising at a rate which could threaten food
security and that cost pressures - due to the energy crisis, transport
expenses, and the impact of the drought - were likely to continue.
This will see consumers continuing to economise by buying cheaper
alternatives."

		       

_
_

_CNBC AFRICA
[https://cure-zgpvh.maillist-manage.net/click/1493f4796a34fe79/1493f4796a34cb43] - ___SOUTH
AFRICAN RAND STRENGTHENS AS FED KEEPS RATES ON HOLD

"The South African rand strengthened on Thursday after the U.S.
Federal Reserve held interest rates steady as expected and reiterated
inflationary concerns." 

		       

_
_

_THE GUARDIAN
[https://cure-zgpvh.maillist-manage.net/click/1493f4796a34fe79/1493f4796a34cb45] - WITH
SIX MONTHS TO GO, THE US ELECTION IS MORE UNPREDICTABLE THAN EVER_

"Depending on the expert, either Biden or Trump is likely to pull
ahead, but this election race is playing out in an unstable
landscape."

_
_

_BBC
[https://cure-zgpvh.maillist-manage.net/click/1493f4796a34fe79/1493f4796a34cb47] - __US
ECONOMIC GROWTH SLOWS BUT INFLATION GROWS_

"The US economy grew by less than forecast in the first three months
of this year but inflation gathered pace, which could delay an
interest rate cut."

		       

		       

What we think 

Last week we said that, _“…the non-farm payroll releases have
been notoriously hard to call of late, with the market frequently
being caught on the wrong side of the USD reaction. We’ll be right
eventually, so let’s flip a coin and hope that we finally get a
weaker than expected NFP number this Friday – that really would
allow for a bit of positive ZAR.USD impetus.”_

_ _

There are times when it’s easy to mistake a broken clock for a
crystal ball. So, while it was great to see the above come to pass –
Non-Farm Payrolls and the Unemployment Rate both disappointed, pushing
the Dollar Index to its weakest level in almost a month and the
ZAR.USD to within 12c of its best levels in 2024 – we’ve been
calling for soft USD data for some time, while being proven wrong
fairly frequently.  

 

We do now need to see more weak US data in the coming weeks and
months, which could then potentially allow the Rand to eye the big
18.00 figure. That won’t be this week, though, as there is very
little scheduled data out of the US. For those with an eye on the GBP,
however, the BoE interest rate decision and GDP data release will be
key. __

_ _

Range for the week:  18.20 – 18.60

		       

		       

		
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