Welcome to another dose of Weekly Rand insights!

It was another action-packed week in the world of South African markets. Global inflation data, local manufacturing performance, and interest rate anticipation kept the Rand on its toes.

Despite a volatile environment, the Rand showed resilience, bouncing back in fine style!

Let’s dive into the week’s market moves and see how key data shaped the currency’s trajectory.

Key Moments (9 - 13 Sep 2024):

Some of the more pertinent headlines and events over the past week:

• South Africa’s Mixed Signals: Manufacturing grew defying odds, but gold production continued its decline
• US Inflation Beat Expectations: High-than-expected-inflation reinforced expectations of a hawkish rate decision the coming week
• ECB Cut Interest Rates:The European Central Bank cut interest rates, as expected

The Rand opened the week around R17.80$, after managing to claim back some ground in late Friday trade, but what was the outlook for the week?

On Friday, our Rand prediction modelling was expecting some weakness going into the week, with a move back above R18.00 anticipated, but critically needed to break above the 18.02/05 level to confirm more upside - see below (click to enlarge)

(enlarge here)

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So we were expecting some upside at least initially...

And Monday obliged with the Rand immediately under pressure, pushing the currency weaker, hitting R17.96 before it pulled things back in the afternoon and evening to close in the lower R17.80s...

...as traders eyed the ECB's rate decision and US inflation data later in the week - which they hoped would give signs of a rate cut by the Fed.

A very choppy Tuesday saw the Rand briefly dip below R17.82/$ and then jump to R17.97/$ before South Africa’s manufacturing production report came in stronger than expected at 1.7% YoY (versus a forecast of 0.7% MoM).

The Rand pulled back a bit on the news but then weakened again to end the day around R17.93/$

Wednesday was another whipsaw day with the Rand dropping below R17.85 before bouncing back up to hit R17.98 ahead of the release of U.S. core inflation data...

..which came in at 0.3% MoM - higher than the previous month and higher than expected, solidified market views that the Fed could maintain rates at current levels.

This Rand recovered on the news, pulling back before closing out midweek around R17.88 to the US$.

In other news:

• In an escalation of global tensions, Russian President Vladimir Putin warned that if Western nations permit Ukraine to use long-range missiles to strike targets within Russia, it would signify direct NATO involvement in the conflict, fundamentally changing its nature.

  He emphasized that such actions would require NATO intelligence and programming support, effectively escalating the war from just being a proxy one...

  ...let's trust some sanity starts to prevail!

• US stocks made a recovery from the prior week's collapse, with Dow Jones outperforming the other indices, while Bitcoin pushed back above $60,000 for the first time in a couple of weeks

Thursday was a real humdinger for the Rand...

...as it initially weakened in the morning session to hit R18.01/$ ahead of gold and mining production data, which continued to show a decline year-on-year of 3.5% and 1.4% respectively.

And then there was the ECB interest rate decision, and the central bank decided to cut rates by 25 basis points, lowering the lending rate to 3.65%.

The market reacted...

...and so did the Rand, as it reversed sharply (after having hit our minimum target).

In no time the market was below 17.90...then 17.80 and then continued to drop to close the day out around R17.76/$ - not too shabby!

After a volatile week, the Rand attempted to stabilize on Friday as it bounced around, dropping below R17.70 before weakening in late trade to end the week in the lower R17.70s.

A better week for the Rand - and once again, a week where both exporters and importers had some opportunity to take advantage of beneficial levels.

The Week Ahead (16 - 20 Sep 2024)

Looking ahead this week, there are some potential big triggers, with both the US Fed and the Bank of England rate decisions on the cards, as well as some local inflation.

With such pivotal announcements coming up, next week promises more action for the Rand.

Stay tuned, and feel free to share your thoughts or ask any questions!

Are You You Taking Action At The Right Time?

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.

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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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