Rand Hits 12 Week Best...But Can't Hold On To Gains

The United States is enduring a very difficult period...

Having just been hit with Hurricane Harvey, one of the most destructive hurricanes we have seen in quite some time...

...along comes an 'up-sized' Hurricane Irma wreaking havoc in its path as it bears down on Florida, sending millions running for their lives.

And while the storm rages on, so does North Korean tension.

No resolution has been reached, and no subsiding of the pressure yet.

This all going on while the Trump administration tries to effect some positive movements such as tax reform. And while trying to solve American immigration issues such as DACA.

It sure was an interesting week, with South Africa having positives of pulling out of a technical recession - amid negative effects of ongoing land-grab rhetoric and political tensions rising in the ANC succession race.

So, a lot of news, but how did the USDZAR fair?

Read on to find out more...

The prior Friday's forecast showed the Rand still hovering around that mentally important level of R13/$...

While this is not an important mark with the current trends, it is one of those figures which persons make a lot of, as it is like some kind of mental achievement us strange humans look for. It all plays on sentiment...

The outlook was for a move lower in the R12.96-12.74 target area, before the market would then bottom out and head higher.

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Note: We are trying a slightly new format to our Rand Reviews. Let us know what your thoughts are by replying to this email...

The days that followed after our forecasts sure were interesting...

The events of note from this week were:

• Hurricane Irma - it seems this insanely powerful weather system is going to strike Florida over the weekend, with serious damage expected...
• Trump attacks DACA - a Visa which effectively allows illegal immigrants who entered the USA as minors to live and work in the US. Trump wants it gone in 6 months.
• SA's GDP - taking South Africa out of its technical recession
• US Trade Balance - often a mover
• European Central Bank - ECB's rate decision and statement
• North Korea - it just isn't going away...

On Monday, despite it being a US Holiday, the State of Florida declared a State of Emergency in anticipation of Hurricane Irma striking there later in the week.

This on the back of jobs numbers lower than expected, and Non-Farm Payroll missing its mark last week, meant it was rather a dreary Monday for the USA, keeping the Dollar on the weaker side.

We saw the market move fairly gently for the course of Monday, and still keep tight around the R12.95-13.00 mark, despite some choppiness. In other news, there was fat 67c increase in petrol price from Wednesday...

Tuesday had the big event for SA for the week - SA GDP figures which were meant to be the best looking ones in many a quarter!

With an expected increase of 2.1%, and further pressures on the Dollar, it looked to all be heading SA's direction. In addition was the unlikely event of the USA engaging North Korea after their H-bomb test...but who knows what will happen if it were to come to the crunch.

GDP figures came out in handsome form - a 2.5% increase!

The Rand liked that, and soon touched as low as R12.85 to the greenback!

To add some more spice to the day, Trump decided to wage war against the immigrants of America once again, this time going after DACA, a piece of legislation from Obama's term. This legislation allows children immigrants who have come into the country to live and work legally.

This is bound to cause a bit of a stir, as it affects somewhere in the areas of 800k persons who rely on this Visa.

Wednesday was our next forecast day, and also US Trade balance day - one always worth keeping an eye on.

Not a direction giver, but definitely an action trigger!

And it seems it did trigger a bit of action, as the Rand moved swiftly on Wednesday afternoon, in and around that event, strengthening as far as R12.74/$ on Wednesday evening - right into our target area.

It seemed the week of toils and tussles in the USA, and the major win on SA's GDP had had some good effect on the market.

And then our forecast - further strengthening of the Rand had confirmed the count to be a touch of strength deeper into our target area before the Rand would bottom out in the 12.77-12.65 areas.

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Thursday saw the Rand lose a portion of its gains from days previous, moving as high as 12.8750 on the back of ECB Interest Rate decision around midday, which left the market quite choppy.

But despite Draghi's dovish (negative) comments, there was no great effects on the market.

Apart from that, and a third US State (North Carolina) declaring a State of Emergency in anticipation of Miss Irma, it was a quiet day...

And on Friday, a basically eventless day, we should have been expecting little action. But such was (of course), not the case!

Throughout the entire day, with (seemingly?) no events backing it, the Rand weakened as far as R12.94/$, returning back on most of its gains from earlier in the week.

And with that, the week closed out with the Rand, ending basically where it had started, after pushing to a new 12 week low against the Dollar.

This Monday starts with a severe hangover in the US, counting the costs of the havoc that Irma has brought to Florida, with still more to come.

And another anniversary of the infamous 9/11 attack...and 16 years on, the Western world is still facing the daily threat of radical Islamic terrorism as well as rogue nations run by madmen.

While locally, Zuma continued with his Mugabe rhetoric over the weekend, prompting the ANCYL to lead the way in his 'radical economic transformation' (Communist) agenda...

So, not a bright start to the week...but where to now for the Rand?

We have two bigger economic events this week, both on Thursday, but sentiment as always will be the driver.

And it looks like (short-term anyway), the Rand is expected to lose more ground against major currencies, with a follow-through of the thrust higher last week with Dollar, Euro and Pound strengthening against the Rand.

We are keeping our eyes on key levels that will signal a larger degree trend reversal is in play, and should have some confirmation (or otherwise) of this during the next few days.

So just as Hurricane Central has given US citizens a 'heads up' so that they can make some life-saving decisions and take action before it's too late to do so...

...get our 'weather forecast' for the Rand, providing you with a roadmape of expected Rand direction over the next few days, weeks and months ahead, with key levels and ideal target areas - all based on how similar markets have moved historically.

Looking forward to seeing you on the inside track.

To your success this week and beyond~

Best regards,

James