Welcome to another issue of our Weekly Rand Review, as we as take you through another humdinger of a week for the South African Rand.
Still suffering from a hangover after the market's reaction following the Budget speech, it seemed the local currency was going into the week firmly on the back foot...
...but as so often happen, just when the TZAR looks to be against the ropes, it tends to bounce back - and so it did again...amidst a backdrop of ever-changing domestic and global dynamics on various fronts.
Let's get into the nitty-gritty, shall we...
Key Moments (26 Feb - 1 Mar 2024)
Some highlights from the past week:
- SA Trade and Inflation Disappoints: South Africa flips to a trade deficit, and inflation worries return.
- US Economy's Mixed Signals: US Durable Goods and ISM Manufacturing data both come in weaker than expected.
- US Stock and Bitcoin Soar: S&P500 and Nasdaq hit new highs, and Bitcoin comes close to doing so.
On Monday, the Rand started the week on a shaky note, opening at R19.29/$ against the US Dollar after a horrid prior week's performance.
It was one of those days when the market bounces around with not much end result, initially edging stronger to test R19.25, before the market tested the Rand's resolve, pushing it up back up to R19.36/$...
...but the local currency held on and managed to claw its way back to end the day back where it started.
But come Tuesday, things started to get interesting, as the Rand first lost some ground back above R19.30...
...but then turned around and pin-dropped all of 26c throughout the day to hit R19.06 to the Dollar!
Not too shabby....
Later in the day, the Rand seemed to get an extra boost after some disappointing US data, with Durable Goods Orders dropping 6.1% MoM, which was more than the expected 4.5%...
...and the most in nearly 4 years - a worrying sign for an economy when this kind of spending starts dropping off.
Wednesday dawned with the Rand sitting at a more respectable R19.07, but it didn't stay that way, as the market reversed strongly to push almost back up to test R19.30/$ before managing to claw back some ground to end the day in the lower R19.20s.
The day was not a particularly positive one, however, in terms of data releases, with South Africa's Trade balance dropping back to a R9.4bn deficit, shifting from a revised surplus in December.
Also, producer price inflation in South Africa accelerated to 4.7%, up from a five-month low of 4% in December, indicating rising costs in the production sector...
which diminished hopes for an early interest rate cut.
Meanwhile, in other news:
- Bitcoin was in the news again as it had one its best months in a very long time, gaining over 50% in value in the month to pushing within spitting distance of its all-time high of 69000 (see live chart here)
(we had this move covered in our Global Market Forecasts btw)
- The S&P 500 and Nasdaq also pushed higher in the latter half of the week to hit new all-time highs, but of interest, the Dow Jones Industrial and Transportation remained off their highs..
...some divergence happening?
Getting back to the Rand, Thursday saw the market open around R19.23 to the Dollar in early trade, and then proceeded to test either side of the 19.16-19.32 range before pushing lower to end the day back below R19.15$.
And then, all of a sudden, we were into Friday, and the first day of March madness...
...and it didn't disappoint, as the market initially rose to test R19.24/$ but then fell sharply to break out of the range for the week to push below R19.15.
And in the midst of this came some more concerning news of the US economy, with ISM Manufacturing PMI falling to 47.8 from 49.1 in January, reflecting a fresh downturn in demand for manufactured goods in the United States...
...with this being now the 16th month of in a row of contracting (below 50 indicates the sector is contracting)...some more worrying signs.
But despite this sign of weakness, US stock are at new highs!
Something is not adding up somewhere...
Anyway, this seemed to provide a trigger for further Rand strengthening as the market powered below R19.10 to the USD, and somehow it managed to hold out around these levels as the week came to a close.
And in so doing, it ended the week in the green - an encouraging start to March.
The Week Ahead (4-8 March 2024)
So as we head into a full week of March madness, there will be a few key events to provide triggers for moves:
- SA - Current Account
- US - US Fed Testimony, Non Farm Payrolls
And if you are looking for some direction, our forecasting system is giving us some important pointers for the weeks and months ahead...
...helping us and our clients to keep one step ahead of the market.
As we showed in the past week's move -
to make the RIGHT decisions...and take the RIGHT action...
...at the RIGHT time!
Hit the link below to get access to our latest predictions.
Until we meet again, safe trading!
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 we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.
Simply use the link below to get access now.
This will give you access to the same charts we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.
No charge. No card. All yours to trial for 14 days.
(You don't want to regret not having done so this time next week...)
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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