Welcome to another issue of our Weekly Rand Review.

It was another eventful week for the Rand as a mix of local and global factors sent it on another rollercoaster ride...

...as we saw the usual tug-of-war between local economic pressures and global market dynamics, which were largely impacted by news and actions out of the White House - once again.

Overall, however, the Rand managed to navigate the choppy waters to end the week on a stronger note.

Let’s break it all down.

Key Moments (10-14 Feb 2025):

Some of the more critical factors affecting price action this week:

• SA Manufacturing & Mining Woes: Manufacturing Production, as well as Gold and Mining all disappointed
• US Data Also Disappoints: Jan Inflation surprised to the upside, while Retail Sales slumped
• Trump Policy Train Update: From tariff announcements, peace talks, exposure of corruption and downsizing, the new US administration is on a mission
• Stocks Hit Record High: South Africa's stock market surged to hit new record highs

Monday: Rand Takes a Hit But Fights Back

The Rand started the week on a nervous tone, opening at R18.62/$ before briefly spiking to R18.65/$ on the back of the news of Trump's Executive Order and the US State Department statement regarding South African government's actions and the implications for foreign aid as well as opening the door to those affected by these actions.

The Rand nevertheless managed to make impressive gains to hit R18.35 before closing around R18.43/$ as traders positioned themselves for the week ahead.

Tuesday: Poor Manufacturing & Hawkish Fed

Tuesday opened where it had left off and seemed to meander, moving between R18.42 and R18.52 to the Dollar...

...despite disappointing Manufacturing Production figures, which showed a -2.4% month-on-month decline in December, which was significantly worse than the expected 0.9% growth, highlighting ongoing struggles in the industrial sector.

At the same time, US Fed Chair Jerome Powell began his two-day testimony, where he stuck to his hawkish guns, emphasizing that rate cuts were not a given.

As a result, the Rand lost momentum, climbing to R18.46/$ as global risk sentiment soured.

Wednesday: US Inflation Triggers the Market

The market opened around R18.46 and weakened in early trade before the Rand managed to reverse things nicely, touching R18.42 by early afternoon as the markets awaited inflation data out of the US for direction...

This was the turning point. The US inflation report landed hot, and the dollar came out swinging.

• US Core Inflation (YoY): 3.3% (Forecast: 3.1%)
• US Headline Inflation (YoY): 3.0% (Forecast: 2.9%)

The markets immediately reacted, sending the USD higher as traders reassessed the Fed’s rate-cut trajectory. Suddenly, the hopes for a quick pivot by the Fed faded, and emerging markets, including the Rand, took a hit...

..pushing the local unit to R18.57 before managing to claw back some ground to close back below R18.50, as some traders took profit on the USD rally.

And in other news...

Trump Policy Train Steams On

The new Trump administration continued the pace of initiatives and actions across multiple fronts, including:

• sweeping layoffs and plans for large-scale reductions in federal work-force
• opening up energy independence
• addressing the US health epidemic
• ambitious overhaul of global tariffs, introducing a "reciprocal tariffs" system and imposition of a 25% tariff on all steel and aluminum imports
• reducing border crossings to record levels
• renaming the Gulf of Mexico...

...and a few leaps forward to bringing an end to the Russia/Ukraine conflict - just to name a few.

And of course, the US Department of Government Efficiency (DOGE), under Elon Musk, continues to unearth massive waste, abuse and fraud in federal departments and agencies...

...with their official DOGE website and a Polymarket DOGE page keeping a track of saving so far - $49+ billion in 28 days...(that is closing in on a trillion Rand)

...a staggering number - but my bet is this number soars in the weeks to come!

JSE Hits New Record High

This week it was the SA market's chance to hit record highs, as both the JSE All share Index and SA Top 40 both pushed above previous highs, the latter breaching 80,000 for the first time (per below)

As can be seen from the above chart, the SA Top 40 has been trading in an ascending wedge pattern the past few years, with the top trendline expected to provide resistance and a possible reversal...

...in other words expect some more upside in these markets in the near future, but risks abound for a reversal in the not-too-distant future...

...which could impact on other global markets, including the Dollar, Gold and Bitcoin.

Thursday: SA Mining Woes Add Pressure

Getting back to the Rand...

...the local currency had a real whipsaw day, opening at R18.48 before bouncing around in a range as the market digested the US inflation numbers and awaited SA mining data...

which when it came, was not pretty:

• Gold Production (YoY): -8.4% (Previous: -11.5%)
• Mining Production (MoM): -3.9% (Previous: 0%)
• Mining Production (YoY): -2.4% (Previous: -0.9%)

The decline in gold and mining output was another red flag for South Africa’s economic prospects, showing that the resource sector was struggling to gain momentum.

At the same time, the US Producer Price Index (PPI) data showed inflation pressures were still present, reinforcing the strong USD narrative.

The Rand reacted negatively, testing twice above R18.60 but then managed to claw back some losses, closing at R18.47/$.

Friday: Disappointing US Data Helps Rand

The Rand opened at R18.47 on Friday, still well off where it had closed the week before despite Thursday's reversal.

But just when it seemed like the Rand was heading for a weekly defeat, the US Retail Sales report swooped in to save the day, posting a decline of 0.9% MoM - well below the forecasted 0%.

This was a massive miss - and suggested that US consumers were pulling back on spending, fueling concerns about the health of the world’s largest economy.

The market reaction was swift—the USD weakened, risk assets rebounded, and the Rand surged to hit R18.30 before closing out around 18.35 by the close.

For once, bad news in the US was good news for the Rand.

Did you manage to take action in time to protect yourself...or take advantage?

If not, you need a system to make better decisions...

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The Week Ahead

Well, we said last month to expect a wild ride in 2025...

...and it certainly has been one heck of a one so far.

But don't expect any letting up!

Not a huge amount happening in terms of major economic data releases internationally, while Saffers will be looking at local unemployment, inflation and retail sales numbers ...

...and, of course, the Annual Budget speech by the Minister of Finance.

But again, it is likely that international events will be the major driver this week, as traders try keep up with the pace of events and their implications for market direction.

As for us, we will instead continue to look to what the charts and sentiment cycles themselves are telling us. - and I recommend you do the same!

To give you a little helping hand, feel free to take our Rand forecasting service for a test-drive!

This will give you access to the same charts that help guide us and our clients with the likely direction of the Rand - ahead of time, enabling us to make educated and informed decisions.

Simply use the link below to get access now.

No charge. No card. All yours to try out for 14 days.

If you have any questions or feedback, please leave them below.

To your success~

James Paynter

P.S. Worrying about how to in manage your Rand exposures this year? Email me or give me a call on (041) 373-6310 or (087) 551 2848 - we would love to help.

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