ZAR Forex Report – Downgrade avoided, we live to fight another day!
Don’t pop the champagne just yet, as all three credit agencies have changed their outlook on SA to negative.
Last week the Rand generally moved sideways as all events were dwarfed by Standard and Poor’s credit rating decision released on Friday evening.
Most economists were of the opinion that the country would survive a credit rating this time round, even with the country’s low growth rate.
As far as global news was concerned, the USD continued its positive run – consumer confidence rose after the election and house prices continued to increase.
Oil prices jumped as much as 10% as OPEC announced a cut in oil production by a larger than expected 1.2 million barrels per day.
How long this agreement lasts will remain to be seen – for what it is worth, investors expect US inflation to rise, which could lead to higher interest rates and thus a stronger USD.
A December Fed rate hike is now fully priced in.
The Rand opened on Wednesday at 13.90 against USD, before weakening. ZAR however kept in range and started Friday’s trading at 14.08 before Friday’s positive US payroll data.
Job creation came in more or less as expected at 178,000, allowing the Rand to strengthen slightly before rallying late on Friday night as S&P kept SA’s credit rating unchanged.
Don’t pop the champagne just yet, as all three credit agencies have changed their outlook on SA to negative.
Unless SA’s economy grows at a faster pace, don’t be surprised if we get downgraded next year June…
This week the market will be watching what happens in Europe following the Italian referendum decision and subsequent resignation from the Prime Minister.
The Euro has reversed most of its losses, a 2 year low, and the risks seem to have subsided.
Locally this week we see SA annualised GDP today, consumer confidence and mining on Thursday. Also Eurozone main refinancing rate on Thursday.
In other news, it is said economy professors had their best week of the year as a photo emerged from Cuba with soldiers pushing the jeep carrying Fidel’s, ashes after it broke down.
Have a great week.
ZAR FOREX RATES
USDZAR = 13.6317
GBPZAR = 17.4091
EURZAR = 14.6773
AUDZAR = 10.1404
NZDZAR = 9.71456
CADZAR = 10.2799
CHFZAR = 13.5541
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