Rand loses 4% of value...what now?

The headline says it all..."Rand loses 4% of value...what now?"

A truly bruising week for the economy, as the Rand soared to touch over R13.71/$ - a level not been seen since May. Although there was some pullback in the latter half of the week, the damage had been done.

Even worse, the Euro & Pound reached levels which have not been seen since late 2016!

....(this all as per our predictions from this last week - see below)

So what are we to do?

One thing I would suggest, BEFORE reading this email is to register for the webinar we are doing next week -

I will be joined by Andrew Rissik of Sable Forex, to give you some insights into the outlook for the Rand and the economy and what avenues are available for you to secure your hard-earned wealth.

It should be a great evening - please click here to register and join us. It 's a free webinar, so please hop on board.

I look forward to seeing you there...and now to get on with the review of the last week!

Our forecast for the first half the week was completed on Friday, with two possible scenarios playing out but the most likely one being for a push over R13.5355 in the coming few days...as seen in the chart below.

Click to enlarge

And this was what the next 3 days brought for us...

Events of note from this last week:

• COSATU Strike - countrywide strikes create massive disruption to different industries across South Africa, without really achieving anything substantial...
• North Korea & USA - this one is not going away anytime soon...
• SARS removes requirements for Tax Clearance Certificate - Good news for those looking to move money out the country! Read more here
• US Dollar vs Rand crashes 50c in 4 days - as per predictions from the previous week, the Rand lost nearly 4% of its value in just a few days...

Come Monday, the pressure was squarely on the Rand. Despite pullbacks late the previous week, we were sitting a long way from that magical R12.80/$, instead trading at R13.25 on Monday morning.

Increasing threats and taunts traded between the US and North Korea was not helping the currency at all, jarring the nerves of many:

North Korea's foreign minister claimed that "Trump has declared war" by one of his Tweets, and that a "Strike on the US is inevitable"...while the White House denied such a thing. North Korea will use any excuse to start a war, with crackpot 'Little Rocket Man' (as Trump so fondly calls him) just itching to pull the trigger. Ominous stuff...

Over the course of Monday, the market weakened to touch as high as R13.36.

Tuesday was more of the same, the Fed confirmed the plan of increasing interest rates gradually to bring inflation back, which supposedly gave the Dollar a boost.

On top of that, the South African economy took a beating with a 14-point drop in the latest update of the World Economic Forum's Competitiveness Index, with WEF analysts describing SA’s economy as being "nearly at a standstill ..."

The Rand reacted as expected, pushing above our crucial R13.4027 level to confirm a move still higher.

Onwards to Wednesday -

With the reported chance of a rate hike in December now nearing 70%, this was meant to be fueling the USD's surge against the Rand - for us, it was just a playing out of our predictions.

This continued on Wednesday as countrywide SACP & COSATU marches were carried out, the Rand weakened dramatically!

Before it was even midday yet, the Rand had touched R13.54/$ and was right into our predicted target area!

One positive from Wednesday was that it was confirmed that SARS was removing the need for some requirements when applying for a tax clearance certificate - you can read more about it over here

By the time our forecast was due, we were at R13.5826 (after a high of 13.60) - and the outlook was not looking good for the Rand:

A target area of 13.71-13.87 was expected to be reached within the next few days...so it was time to fasten our seat belts, as it looked like we were in for a ride!

Click to enlarge

It had already been a rollicking week by the time Thursday rolled around, and it did not seem like it was about to stop...

With no real event triggers, the Rand pushed just into our target area at R13.71/$ on Thursday morning in a spike of volatility...

...and then fought back some.

The few events that did happen were the US GDP figures and the Bank of England Governor Carney speaking - but it seemed those were enough to trigger a significant reversal!

The Rand shot from R13.71/$ to close just a touch over R13.50 on Thursday night, and then still further on Friday morning!

With a packed data calendar on Friday, we probably should not have expected anything other than the volatility to continue.

All of the following events were due:

• ECB President Draghi 's speech
• UK GDP & Inflation
• SA Balance of Trade for August

And as expected, we kept seeing these swings of the Rand -

It moved smoothly down as far as R13.4256, before reversing strongly and heading higher.

Friday also marked a record high for the S&P500 as it hit over 2500 ...

In late afternoon & early evening, the ZAR lost ground again, moving north of 13.54 to end the week around 30c weaker than where it started...

The USD was once again on the front foot, heading into October...

Monday starts with news of a horrific shooting in Vegas over the weekend that has left over 50 dead, and tensions increasing between US and North Korea, with Trump tweeting that negotiating with Kim Jong-un was 'a waste of time' and a US carrier-led fleet being deployed to seas off the Korean Peninsula.

With several big data releases this week (the big one on Friday), do NOT expect the Rand to take the week off!

Our forecasts are hinting at the Rand being under pressure but there are still some key levels that need watching.

For a full picture...take our free trial now (simply hit the button below)

Look forward to helping succeed~

Kind regards

James Paynter

P.S. Just a reminder about next week's webinar entitled

Andrew and I will be over-delivering and holding nothing back in giving you our insights into what lies ahead for the SA economy and the Rand - and what this means for you.Please join us by registering here

Look forward to helping succeed~

Kind regards,

James Paynter