ZAR Forex Report – It’s been a busy week, let’s address some of the key events

Unemployment figures released early last week showed that SA’s jobless rate rose to the highest in over a decade as the unemployment rate rose to 27.1% for the quarter ending September.

A figure higher than the 26.6% for the previous three months and the highest since 2003.

A day later, SA’s inflation figures were released – the rate increased from 6.1 to 6.4% a month earlier, meaning that more people without jobs or an income are paying higher prices for their goods.

This combination of punches to the body led the SA Reserve Bank to leave interest rates at 7%; unchanged for the fourth straight meeting, as it warned that inflation is getting too high.

With the Rand and other emerging markets being very sensitive to the US Dollar and US economy, the Rand was quiet on Thursday as the US celebrated Thanksgiving Day.

The ZAR was trading range bound between 14.01 and 14.30 on Thursday and Friday as it looked for direction from the Moody’s credit rating review on Friday night.

The rating news varied – while Moody’s did not downgrade SA’s rating, Fitch changed our outlook from stable to negative.

A bit like celebrating a draw in sport I guess, as we really should be aiming for an improvement and not a “no change”.

The market reacted favourably as the ZAR opened the week below 14.00 – the first time since the US election.

Helping the Rand strengthen was investor opinion that the Trump trade was overdone, resulting in a gain for emerging market currencies.

On Monday and Tuesday, the Rand strengthened the most in almost a month, leading global gains against the dollar, as senior members of the ANC called for President Jacob Zuma to step down.

The ZAR rose as much as 2.8% and was trading below 13.80 last night.

Amazing how much Zuma is priced into the Rand, but it seems the President has survived this round.

No surprises if we see a cabinet reshuffle or a few ministers resigning.

While local politics remain the focus and draws the attention at this time, global markets and sentiment remain Rand positive.

Some key data out this week including SA trade balance on Wednesday, followed by Eurozone unemployment and SA Manufacturing and CPI on Thursday.

It is US payroll week, so look out for the big one on Friday afternoon – US unemployment.

Have a great week.

ZAR FOREX RATES

USDZAR = 13.9643

GBPZAR = 17.3563

EURZAR = 14.7794

AUDZAR = 10.4232

NZDZAR = 9.88876

CADZAR = 10.3782

CHFZAR = 13.7496

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