ZAR Forex Report – The Rand, always on a knife’s edge

Again, President Trump is dominating news economically, politically and worldwide.

Negative comments towards other countries’ weak currency policies have not gone unnoticed – essentially the president wants other currencies stronger and the USD weaker to assist exports.

On the other side of the pond in Europe, GDP and inflation data pleasantly surprised the market, raising expectations that the ECB will have to increase interest rates at some point this year.

Locally, fears of a cabinet reshuffle are still doing the rounds as rumours of ex-Eskom CEO Brian Molefe replacing Finance Minister Gordhan continue as comments from President Zuma indicated that “Treasury is standing in the way of reform.”

The week opened with USDZAR at a strong 13.26, while trading at 14.30 and 16.55 against EUR and GBP respectively after Friday’s US non-farm payrolls suggested a strong economy. Faster than expected job growth and economic stability assisted higher yielding currencies such as the Rand as it had its best day in 3 weeks.

The ZAR has again touched the 13.20 level against USD, but still failed to break it.

In early trade on Tuesday, the ZAR lost 1% to 13.44 against the USD ahead of the State of the Nation address on Thursday as we see the market largely driven by political factors.

Along with the SONA on Thursday, keep an eye out on US trade data on Tuesday and US consumer confidence on Friday as well as SA mining and manufacturing data on Thursday.

USDZAR = 13.4230

GBPZAR = 16.6116

EURZAR = 14.3372

AUDZAR = 10.2340

NZDZAR = 9.80286

CADZAR = 10.1836

CHFZAR = 13.4441