ZAR Forex Report: What goes up must come down
The Rand strengthened slightly at the start of the week, even outperforming other emerging market currencies and hitting its best level since the firing of Pravin Gordhan
The USD weakened sharply at the start of last week following weak inflation data.
Riskier assets were further outshone by the Wall Street highs and growth in global confidence.
Commodity prices surged as weak data from China was offset by plans of infrastructure development.
As a result, the Rand strengthened slightly at the start of the week, even outperforming other emerging market currencies and hitting its best level since the firing of Pravin.
Global markets suffered their worst overnight losses on Wednesday as investors feared that the Trump administration will avoid the anticipated stimulus.
Wall Street lost up to 1.8% as the Rand also weakened – up to 13.40 against USD from a low of 13.04 the previous day. EURZAR and GBPZAR opened at 14.80 and 17.20 respectively on Thursday and closed the day even weaker.
To add to the weakness, news from Brazil showed that the stock market lost over 10%, the currency also lost over 7% in response to corruption investigations involving the president.
Emerging markets followed suit and the ZAR depreciated by 2%, reaching a high of 13.55 against the Dollar by mid-day.
The weekend brought some much needed optimism as markets as well as the Rand recovered somewhat in late Friday and early Monday trade. The ZAR opened the week at 13.22 against the USD, 14.78 against EUR and GBPZAR was at 17.17.
Markets responded nervously to the horrible news of a bomb blast in the UK and the USD continues to weaken as global news seems to remain Rand-positive going into Tuesday.
Look out for Trump’s budget details later today as well as US Fed minutes on Wednesday.
We also see SA inflation data on Wrdnesday. The price of oil climbed slightly ahead of an OPEC meeting on Thursday. Finally on Friday we see an ANC NEC meeting.
ZAR FOREX RATE
USDZAR = 13.2747
GBPZAR = 17.2501
EURZAR = 14.9410
AUDZAR = 9.95555
NZDZAR = 9.33515
CADZAR = 9.84663
CHFZAR = 13.6682
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