Major wins, major losses - a see-saw week for the Rand

The Rand has been bootstrapping it for a bit too long...

And all too soon, it seemed its luck has run out.

And then there was a comeback.

And then it lost it all again.

This week had it all, as the Rand was thrown up and down as if it were a child's ragdoll during a tantrum. It was another scary week for investors and traders alike. Either big wins or big losses, which is disconcerting for any party involved.

There was more than enough to review. So lets get onto it.

Now, on Friday, we had released our expect trend for the coming few days, and with the Rand at R13.0209, it looked as if it was not going to last too much long before bottoming out.

The target area was 12.96-12.77 before it would then push higher with 13.1465 being the pivotal level to confirm this...

Click to enlarge

So moving into the new week...

With the Rand seemingly glued to the 12.88-13.07 sort of range, something had to crack soon.
When the market opened in earnest on Monday morning, the Rand strengthened further to go just sub R12.90, before it then seemed to retrace as expected...

By 12 o'clock, the playing field had changed.

The going rate was now just a touch under R13/$, as the Rand had moved quite viciously upwards!
While nothing of major note seemed to cause this sudden spurt out of the ordinary, it was said that US & EU Manufacturing figures had given the market a boost.

It was generally expected to be a quiet week, despite the Fed Interest rate decision, and also the a few other medium impact events such as Durable Goods Orders.

The other event of note (more for interest than effect) - the US GDP for Q2 was expected on Friday.

For the remainder of the day, the Rand consoldiated on its losses, and when the following day got going, we were back in the low R12.90s...

...that was, until Tuesday also produced some fireworks!

From the moment SA business began, the Rand was on the move - and upward it soared!

From a low on Tuesday of 12.92, it raced to over R13/$ just after midday!

Apart from the SA unemployment rate coming through at 27.7% (its worst level since 2004 - and who would have expected anything better) there were not a lot of events to be seen at all.

Once again, the Rand had traded off of almost nothing.

And following that, there was that same period of consolidation again where the market just held strong for the afternoon period, even strengthen slightly.

However, come late evening, it went higher.

So far as to just miss punching over R13.10 to the Dollar, making a high of 13.096...

Many put this sudden spurt of the Rand's down to what was happening in the USA, as Trump moved one step closer to his infamous Obamacare repeal. The Senate agreed to vote on the repeal and replacement of the bill, despite only squeaking through with VP Pence having to make the tiebreaker call.

How far they really got was another story, but it certainly seemed that they were making progress...slowly...

It seemed things were turning back with the Dollar, as it pulled back well on the EURUSD too...but still not enough. It had been rather a torrid year so far the USD. It has trended upward since the beginning of 2017, and while we have not done an analysis, it appears to be on the ropes of going further too!

Onwards to Wednesday.

And we were greeted by a choppy market. An expectant market.

With all eyes on what was coming from the Fed Decision on Interest Rates that evening, and it seemed the day was going to be coloured by that.

And sure enough, it was.

Slowly but surely though, the Rand strengthened...

...and just before the final decision came through on the interest rate, it broke to go below R13/$ again...(the resistance just keeps coming!)

And then...

Boom!

The Fed makes the decision, and despite it being one of their 'most boring' announcements ever, the decision to hold interest rates sees the Rand plummet!

From trading at R13.08 at the start of the day, and R13.00 just an hour before, the Rand hit below R12.90 in just over an hour!

This...

...had gone to this

As always though, the market turned things around, and by mid-afternoon on Thursday, we were back trading at 12.95!

Phew...it had been a whirlwind couple of days, but still the USDZAR is holding on for dear life to stay in those sub R13/$ levels...

It had turned into further woes for the USD, as it also crashed against the EUR, sending it to 1.1776/€, a figure last seen on 11 January 2015!

The Rand (for now at least), was just riding the storm around it (and loving it!)

But...but but but...this is the Rand.

So it did not come as a surprise on Thursday when all the good turned to bad:

The Rand rushed from its sub R12.90/$, to be above R13.05 on Thursday evening

The moves just keep coming! And this one was put down to data that indicated US durable-goods orders climbed more than expected.

Whatever it as, the Dollar now sat over R13/$ when Thursday closed...

And then Friday, the last day had arrived.

But, although a little choppy, the market held strong all day despite the US GDP figures coming through at a cracking 2.6%!

The Rand held a tight range of around 10c for the day, and then the week was done...

The week ahead looks fraught with danger.

Not only did the Rand just endure one of the more volatile weeks in the past months, but this next week is loaded, and I repeat, loaded, with events.

This does not bode well, as it can only increase volatility around the markets.

Maybe the Rand will surprise us again. It often does, in logical terms anyway.

But one thing looks pretty sure - it could well be rough.

Although we do not normally do this, here is a quick look into what this next week brings:

Now, normally we provide more information than this for our clients under the Rand Fundamentals and Events Premium Feature, such as a rating of market impact, previous results and more. But this one is on the house, so watch out for the upcoming events.

This week is going to be interesting.

Don't look away just yet!

All the best,
James