Welcome to our next Weekly Rand Review.
And what a week it has been, as the Rand had its fair share of challenges, with some surprise political maneuvers and a mixed bag of economic data both at home and abroad, plus a new WHO 'global health emergency'.
But for once, the Rand not only managed to navigate the choppy waters, but seemingly thrived on the uncertainty and turbulence, as it roared with a stellar performance (rivalling the Boks' dominant display) to hit its strongest levels in over a year!
Let’s dive into the nitty-gritty of how these events played out and what it might mean for the Rand and your pocket.
Key Moments (12-16 Aug 2024):
To give some of the key headlines and events over the past week:
- Floyd Shivambu Resigns from EFF: The unexpected resignation of Floyd Shivambu from the EFF sent shockwaves through the political landscape.
- US Fed Hints at Rate Cuts: Lower-than-expected US inflation data led to speculation that the Fed might consider a rate cut, causing the US Dollar to wobble and giving the Rand some breathing room.
- South Africa's Economic Woes: Continued decline in gold production and mining production, and increase in unemployment put damper on impre
The week started on a cautious note for the Rand, opening in the mid-R18.20s to the USD, weakening initially but recovering to close at R18.20/$...
...but Tuesday was a lot more volatile, with the ZAR testing R18.26 as the SA desk opened, but then reversed sharply...
...even as the market was hit by a triple-whammy of bad local news:
2023
Not good news for the economy, or the Rand...
...but that didn't stop the local unit from driving the market all of 20 cents lower against the US dollar before closing out around R18.10/$.
a weaker Rand, or that good news means a stronger Rand -
these events are merely triggers for the underlying sentiment...)
Want to understand more about what moves the Rand?
Wednesday was a bit more of a choppy day, but again the Rand had the upper hand as it pushed ever closer to the psychological R18 level...
...better local Retail sales levels, which came in at a 4.1% YoY increase was some encouraging news...
...but the more interesting news of the day was the bombshell announcement on Wednesday evening that EFF's deputy Floyd Shivambu had quit the party to join Jacob Zuma’s MK Party (this coming after some hints that there was a rift between him and Malema).
Some interesting developments...!
In other news:
- Stock markets put an impressive turn-around, with US markets erasing the last week's rout - and the JSE Index managing to break to new highs - an impressive performance, which seems to indicate that the final high is still ahead
- The US continues to defy the odds, with retail sales in July jumping by 1%, well above market expectations, with consumers being willing to buy more...
...but the question is: is this healthy buying, or buying on credit?
- Across the pond, the UK’s economy showed signs of stagnation with no growth in Q2. However, retail sales for July provided a glimmer of hope, giving the Bank of England plenty to think about as they navigate these turbulent waters.
- And then...the World Health Organization (WHO) last week declared monkeypox a global health emergency after a reported surge of cases in Africa. Next attempted 'plandemic' anyone? Fortunately, the WHO has lost all credibility and has proven it cannot be trusted to give us the truth or act in our best interests after the last one...
As for the Rand, it just kept pushing south, as Thursday saw it open around R18.03/$ and despite 3 attempts by the market to break above R18.10, it had the final say, breaking below the big R18...
...for the first time in over a year!
And then it was Friday, which saw the Rand close out the week on a positive note, as it pushed even lower, ending the week below R19.85/$ in a relatively quiet day in the markets....
With the Dollar losing steam and no major domestic data releases, the Rand was able to hold its gains and finish a one-way week with a flourish!
And that’s a wrap on another wild week in the markets!
The Week Ahead (19-23 August 2024)
This week, we will be keeping an eye on South Africa’s inflation data, and across the globe, the Fed’s meeting minutes and speech could provide some crucial clues about what’s next for interest rates. And of course, we’ll be watching with interest to see how the fallout from Floyd Shivambu’s defection plays out.
The Rand showed us it’s certainly had some fight last week, taking its cue from the Boks, commanding performance down under, but with plenty of challenges still ahead, this is certainly not the time to become complacent!
As always, we’ll be here to guide you through whatever comes next.
Until then, keep those wits about you and stay informed!
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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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