ZAR Forex Report: If one goes up, the other must come down

A week ago we saw quieter trade as the US was closed for business, celebrating Independence Day on Tuesday.

The same day, the Rand opened at 13.20, slightly down from the previous day’s highs of 13.27 as risks (especially locally) remain high, but global factors seemed to be improving.

Through Wednesday, as the ANC conference reached its final day, the ZAR weakened and almost touched 13.50 – eventually closing at 13.38 after the proposal to nationalise the SARB sent the market into panic mode.

Overall though, the conference could be seen as positive and a step in the right direction.

While it could be argued that the Rand overreacted to the suggestion of the SARB being nationalised, the currency failed to reverse the losses as it opened on Friday at 13.44 against the USD.

A deteriorating global environment and rise in global yields resulted in emerging markets suffering losses as investors opted for safer havens and focused on the non-farm payroll figures that were to be released on Friday.

The payroll data was positive – the US added 220,000 jobs in June, which pushed US Treasury yields up and placed further strain on emerging markets and the Rand.

The ZAR opened this morning 13.44 against the USD and at 15.30 and 17.30 against the EUR and GBP respectively.

The Public Protector’s decision to back down on the SARB mandate issue is more an embarrassment than anything else; it had very little effect on the Rand. Commodities are slightly down and emerging markets are again being sold off as the USD keeps surging; the Rand is currently trading close to 13.60 against the USD.

Keep an eye out for SA manufacturing data today and mining data on Thursday. Today, the Bank of England’s deputy governor, Ben Broadbent’s speech might give direction to the market and investors. In line with that, look out for Janet Yellen’s testimony to Congress on Wednesday, followed by US inflation data and consumer confidence on Friday.

ZAR FOREX RATE

USDZAR  = 13.5524
GBPZAR  = 17.4887
EURZAR  = 15.4418
AUDZAR  = 10.3125
NZDZAR  = 9.78304
CADZAR  = 10.4929
CHFZAR  = 13.9884