Welcome to our first Weekly Rand Review of 2025.
We trust you had a well-earned rest and wish you a healthy and prosperous year!
That said, if anyone is expecting this year to be a breather compared with 2024, I think they are in for a big surprise...
...I have a feeling we are in for a wild ride, whether market-wise, economically, socially, and yes, politically!
And we need to look no further than the last week or so, as the Rand was buffeted by a perfect storm of global economic and political forces...
...from Donald Trump's statements on Panama, Canada, and Greenland...to Trudeau's sudden resignation...to stock markets hitting 2-month lows...
...the currency pair was tossed about as it reached levels seen last April.
So, sit back with your favourite brew and let us dive into the latest
Market Pulse 📊
- Price Action:R18.43-19.21 range reflecting increased volatility and risk
- Technical Setup: Support at R19.00 & R18.91, resistance at R18.25 & 19.38
- Momentum:Rand bearish bias with some possible resistance being hit
- Risk Events:CPI data, FOMC minutes, and US job reports took center stage
- Outlook:External drivers & USD dominated, keeping pressure on the Rand.
Key Moments (13-17 Jan 2025):
Some of the more critical factors affecting price action this week:
- Local Manufacturing Slips: Manufacturing production turned negative
- Inflation Eases:Inflation eased in both the US and Europe.
- Trump Ruffling Feathers:Before he has even taken office, President Trump is already having an effect on the political arena
- US Jobs Surprise:Nonfarm payrolls surprised to the upside in December
Rand Kicks Off the Week Winning 📉
Opening the week at R17.75/$, the Rand showed a clean pair of heels as most Saffers got back to work in real earnest, with the local currency gaining over 30c to R18.43 by early afternoon before closing about 10c weaker...
...and this with not much to trigger the move, except for the S&P Global PMI coming in less than expected, which should have been Rand negative!
But if you had seen our first forecast for 2025, you would have seen that we anticipated this possible move lower, but we did not expect it to last long at all.
As can be seen from the chart we had issued on the prior Friday, our modelling was rather predicting a move into the R19.00-19.38 area.
(click to enlarge)
Quite some prediction...
...now it was a case of seeing how the sentiment waves actually played out.
Risk-Off Fever Takes Hold 🌌
Tuesday opened with the Rand in the mid R18.50s and it bounced around in this range throughout the SA session, but then took off in after hours with the release of US Services PMI coming through better than expected.
The US dollar took off, and the Rand tanked to hit R18.70 before closing slightly stronger. Of course, the market was also taking stock of Canadian Prime Minister Justin Trudeau's resignation (more on this later).
The Rout Continues 🔥
Wednesday was a nightmare for the Rand, as it opened around R18.66/$ in early trade, but was immediately under pressure...
...and continued to be bullied by a rampant US dollar, losing over 31c by early afternoon as the market reacted before managing to close a couple of cents below R18.90 ahead as the markets digested the latest FOMC minutes.
The minutes showed an uncertain Fed that was still worrying about inflation as well as the effects of the new administrations policy changes, with indications they were likely to move more slowly on rate cuts.
And in other news...
-
Trump Ruffles Feathers Ahead of Taking Office...
Love him or hate him, Trump is back on the world stage...
...and he is immediately sparking controversy internationally, as he doubled down on some bold statements that have certainly ruffled traditional allies and adversaries alike...
...from suggesting that Canada becomes a 51st state, to the US taking back possession of the US-built Panama Canal, to the US needing Greenland for strategic purposes to protect the free world, to renaming the Gulf of Mexico the Gulf of America...
Is this for real, or is he simply flexing his muscles ahead of a potential tariff war?
We will soon find out, but one thing we have learnt is that Trump is a 3D chess level negotiator, and there is almost always some bigger strategy behind what he says and does.
Expect some surprises in the coming months...
...and it seems there already is one!
Canada Says Goodbye to Trudeau...
Justin Trudeau has resigned, after (somehow) remaining Prime Minister of Canada for almost a decade, despite his popularity being on a steady decline, and even more so over the last few years with his globalist agenda and policies...
...as well as his disdain for and treatment of the Canadian people (most notably seen in his authoritarian crackdown during the 2022 trucker's protests).
With low ratings, elections coming up this year and internal disputes over how to handle Trump's proposed tariffs for Canadian goods, the writing was on the wall...
...but still, the abruptness of his resignation took many by surprise.
You can be sure not many Canadians will be sad to see him go.
Rand Treads Water Despite Bad Data...
The Rand had a whipsaw day on Thursday, briefly testing higher before managing to pull back, ending the day almost where it had started - a tad below R18.90 per USD.
That the Rand managed this was fortunate, considering the bad local data with manufacturing production having declined by 1.1% month-on-month and by 2.6% year-on-year...
...not an encouraging sign!
Friday: Jobs Data Whiplash 💥
The Rand opened just below R18.90 as traders braced for the release of US non-farm payrolls, but the local currency was already under pressure, testing R19 by midday and breaking higher shortly after lunch ahead of the news...
...which showed that 256,000 jobs were added in December, the most in nine months, and way higher than market forecasts of 160,000, with the unemployment rate also surprisingly dropping from 4.2% to 4.1%.
The better-than-expected data seemed to spark a sharp sell-off in equities, with the S&P 500 losing 1.8%, the Dow Jones sinking around 800 points and the Nasdaq plunging 2.1%...
...but on the flip-side, it gave the US dollar a fresh boost, and the Rand was catapulted all the way to R19.21/$ before retreating back below R19.10/$ to close out a dismal week for the Rand...
...but for us, despite the Rand's woes, it was a very satisfying start to the year, as our forecast from the week prior had the move down to a tee!
Let's take a look at the stats:
Volatility & Risk Analysis
A much more volatile week, with Monday providing the biggest move of 35.7c
- The Average Daily Range was 28c or 1.5% -This equates to a potential profit or loss of R15,000 every day for every R1 million exposure
- The Weekly Range (total fluctuation) from the lowest (R18.43/$) to the highest (R19.21/$) was a whopping 78c or 4.2%.
Meaning you could have saved or lost R42,000 for every R1 million exposure simply by taking action at the right or wrong time...
That is some volatility! Which begs the question:
Were you hurt by this move?
Based on the above stats, what difference could it have made if you had seen our forecast from the prior Friday?
What would you have saved in money, stress, and regrets?
We are here to help you anticipate these moves...
...so you can take the right action at the right time!
Want to understand how the market actually works
- and how to use this to advantage?
Download your
"Unpuzzling the Rand eBook" HERE =>
The Week Ahead
Sjoe, some start for the year - and we are only 2 weeks in!
As we head into the business side of January, there are a few potential triggers in terms of economic calendar events:
- US: Inflation, Retail Sales
- UK: Inflation, GDP, Retail Sales
- EU: GDP, ECB Rates Decision
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.
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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