ZAR Forex Report – Clash of the heavy weights on Wednesday budget speech

The Rand finally broke through the psychological barrier of 13.20 against the USD on Tuesday last week after positive employment figures were released, closing the day at 13.08.

Wednesday saw the currency continue to strengthen for a sixth day in a row – the longest winning streak since September 2016 – the ZAR gained as much as 1%, dipping below 13.00 against the USD for the first time since August 2015.

In January, inflation in SA slowed for the first time in five months, adding fuel to the fire of the ZAR rally. The Trump trades have certainly helped too. Caution is advised at these levels as the Rand has certainly gained more and faster than other emerging market currencies – it is also worth remembering that while it can take weeks for the ZAR to strengthen, an unwind can happen in a few days…

The ZAR opened the week at 13.05 against the USD, 13.85 and 16.20 against EUR and GBP respectively in quiet trade due to a US public holiday.

The big news over the weekend of course, was that disgraced ex Eskom CEO has been sworn into parliament.

Does this pave the way for him to become the new Finance Minister? Time will tell, but one would assume this would not happen anytime soon, given the budget tomorrow?!

Internationally, the Euro is weakening after French polls indicated that Marie Le Pen and her far right party are gaining momentum in the presidential race.

Tomorrow (Wednesday) is a massively important day as Finance Minister Gordhan delivers his budget speech. In the one corner, we have Gordhan looking to keep state spending low and to keep off a junk credit rating and in the other corner is President Zuma, who has his own intentions – amongst them a nuclear power plant and “radical economic transformation”.

While Gordhan is under massive political pressure, he does not want to see the economy collapse on his watch.

Also look out for the Fed minutes and Eurozone CPI on Wednesday as well as SA PPI and US consumer confidence on Friday.

Have a great week from your non-colluding Foreign Exchange Brokerage.

ZAR FOREX RATES

USDZAR  =  13.1253

GBPZAR  =  16.3113

EURZAR  =  13.8495

AUDZAR  =  10.0451

NZDZAR  =  9.36778

CADZAR  =  9.98263

CHFZAR  =  13.0191

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