ZAR Forex Report – Not the busiest of weeks, but the Rand remains strong

What the market will be looking for is a detailed speech outlining economic and tax policies – and not the usual empty promises and distractions

February 28, 2017

1 minute read

After a satisfactory, yet somewhat controversial budget, the Rand showed appreciation before weakening towards the end of Wednesday last week due to global related issues. French political risk has declined, stabilising the market to a degree and the USD lost some major gains after the Fed commented they are worried about to strong a Dollar.

USDZAR closed at 13.00 on Wednesday – could the strong Rand be a suggestion that the market believes SA has avoided a downgrade later this year?

Emerging markets strengthened on Thursday with the ZAR leading the pack. Reduced political risk in France and weaker USD ignited a rally for the higher risk currencies. The Rand dipped below 12.80 setting its sights on a new target of 12.60, even 12.54. However speculation of a growing storm in local politics pushed the Rand weaker.

The ZAR opened the week at 12.96, somewhat higher than the low of 12.785 as it was reported that the deputy finance minister is being investigated by the Hawks. Pushing aside local politics, we cast our focus to the north as there could be a pause in the Trump trade as President Trump will address Congress later today.

What the market will be looking for is a detailed speech outlining economic and tax policies – and not the usual empty promises and distractions.

There is not much happening in the local market and the ZAR is expected to remain range bound until the USD gives it some direction later today.

In addition to Trump’s speech, Fed policymakers will also speak today, followed by US GDP and consumer confidence on Wednesday. Also look out for Canada’s central bank rate tomorrow and Janet Yellen’s speech on Friday.