Well, who would have believed it...? We are into December already. Time sure has flown ... 2017 has been nothing short of a blur.
In fact, even this last week has been a blur!
Especially for economists who were left scratching their heads for answers, as the Rand strengthened almost 60c in the days following #Junkstatus.
Who would have believed it?
It had been nothing short of an amazing recovery - and one that few would have seen coming - aside from those following our Elliott Wave forecasts.
The accuracy with which the Elliott Wave Principle operates is sometimes quite scary...
...read on to see how it predicted the #Junkstatus turnaround!
How It Happened (27 Nov - 1 Dec 2017) |
Our USDZAR forecast released on Friday was post the #JunkStatus crash - and it showed that while the market had lost considerable ground, it was due to top out very shortly...which would then see it falling sharply to test 13.80.
Remember, this was after the Rand had lost 33c in a flash following the announcement - with every anticipation that Monday would see this continue...
Click to enlargeAnd while it just failed to touch our upside target, what followed was so close to our forecast, it actually astounded even us, the Dynamic Outcomes team...
The above shows the amazing reversal on Monday.
And those looking for any news would have found nothing - no economic, political or logical reasoning behind the Rand's movements. Nada. Nothing.
But that's what it did - as our analysis anticipated it would.
However, before we go any further, lets see some of the key events which did occur during the course of the week:
- ZAR surge post #JunkStatus - who would have thought this would be possible...?
- Zuma's ideas to revive SA - the President announced a cutback of R50bn in government spending in 2018, as well as a R30bn tax hike...
- A cryptocurrency surge - the world's first cryptocurrency, Bitcoin, has now gained over 900% since the beginning of the year...
- UK & EU 'Brexit' - apparently a 'Brexit bill' has been agreed on...
Monday began with a bang.
After a rollicking close on Friday leaving the Rand in tatters, well over R14/$, everyone was expecting the worst.
Currencies Direct's commentary on Monday morning said the following: "The local unit opens at 14.10/USD this morning, but with investment outflows of R2bn expected from SA further weakness could be on the cards."
Other economist views were on a similar line - it did not look good for the Rand.
Sable International's commentary said "Analysts are all in agreement though, the weeks ahead will be particularly volatile for the Rand. Expect things to only simmer down, if ever, when we get beyond the ANC elective conference."
Negativity. Everywhere. Surely the Rand was just going to weaken...?
...exactly WRONG!
As shown in our chart capture earlier, the Rand gained handsomely on Monday - by mid afternoon it had touched R13.67/$...almost 50c from where it was just hours before.
Amazing? Yes. Surprising? Yes, but expected - to those relying on the the Elliott Wave Principle (it never ceases to astounds even us...!)
Monday had enough in it for this whole Rand Review, but there was still the rest of the week left.
On Tuesday, Zuma announced his plans to rejig the country's economy and credit rating:
- R50bn reduction in government spending during 2018
- R30bn tax hike...
For some reason, many believed only the latter would ever actually happen... (how does that saying go? The only two things you can be assured of in life is death and taxes?)
On Wednesday, the market opened around R13.67/$, having kept fairly stable on Tuesday.
However, North Korea had done another ICBM launch sometime over Tuesday evening & Wednesday morning, renewing tensions to an ever higher level between the USA and NK - this missile was said to have the range to strike anywhere in the US. Dangerous times...
Despite negative news of foreign investors having dumped nearly R2bn worth of local bonds since the credit rating, the Rand was holding firm.
Fed Yellen's testimony was due late in the day, which was eagerly awaited.
There are 5 key matters which are facing the SA Government amid the upcoming ANC vote - read Fin24's diagnosis here
Wednesday also meant it was time for our forecast - which duly came around the SA close...
It looked as if we could expect a bit of a retracement higher into the 13.78-13.93 before we would then head lower again, to target 13.4371...interesting days!
Click to enlargeThe market opened in the mid R13.60s on Thursday, with us expecting it to go a bit higher before topping out.
Thursday was pretty choppy for the market, but it continued to hold its ground.
Overall, foreign investors have sold over R7billion of local bonds this week...quite a shocking figure.
In other news: SA’s trade balance showed a R4.5billion surplus - and oil prices have increased slightly. Some positive news was that South Africans took home more pay in October of this year
The market touched as low as R13.57 before it began weakening again to over R13.70...
And then it was Friday - the last day of a crazy week.
Friday brought bad news - somehow, Mpumalanga had got Zuma's wife, Dlamini-Zuma, to be their nomination for ANC president. Just earlier this week, the same had happened in the Free State. In both cases, something was fishy, and it was clear further investigation was going to be done.
On Friday, some fascinating charts were also released by Fin24, showing how the Rand has fared post #JunkStatus...
First Up: Rand's Carry Return Increase
But, Volatility is near the highest of 2017
Yet, November was SA's best month of the year
Fascinating charts...and pieced together they tell quite a story. While there are grave economic dangers in SA for locals and foreigners, many are prepared to take that risk.
On the last day of the week, the market weakened as far as R13.79, before retracing to end the day in the low R13.70s...
The Week Ahead (4-8 Dec 2017) |
Monday, and December is here...
And the Rand has started on the front foot - steadily strengthening against the Dollar after opening above 13.80.
It has also started with increased tensions on the Korean peninsula as the US and South Korea began a massive military drill - there is no easy way out of this one, and President Trump needs all the wisdom to deal with this threat.
We have some more news trigger events this week, the big one being US Non-Farm Payrolls. It is important to know of these possible triggers, but more importantly is to know where the mass sentiment is likely to drive the market - and that is what the Eliiott Wave Principle does better than anything we know.
This past week is another testament to its uncanny ability to keep us on the winning side.
If you have not yet done so, be our guest for 14 days and prove this out for yourself. I guarantee you won't be disappointed.
Look forward to helping succeed~
Kind regards,
James Paynter
