While many were holding thumbs that the ZAR's continued period of strength and stability would someone manage to keep going, it seemed the honeymoon was over as the week got underway from a healthy R12.88...
...and proceeded to rush to R13.48 within just a few days!
A sharp turnaround, and not one South Africans wanted to see.
Was this the swing which signaled the end of it all?
It seemed it really was the end of the Rand's charming run over the the past few weeks and months...
...or was it?
With trends not seeming to apply to the Rand, it is best to keep your eye on what the CHARTS are telling us.
And anyone who did that this last week, would have benefited handsomely.
Read on to find out how...
How It Happened (31 Jul - 4 Aug 2017) |
So, Friday's close was time for an update.
The forecast came out showing the market at 12.9938, and a split possibility for the week ahead, with the more likely of the two outcomes showing a slight retracement without going below R12.85, before heading upward toward 13.33-13.46.
It looked like this was going to be what is described as a "moving week" where sentiment becomes action.
Click to enlargeAnd it started off being exactly that!
Early Monday, the Rand held fairly strong, spiking down to make a low of R12.94/$ - a positive start for the week...
...but the moves only really start at 8-9 am SAST:
When humans - and their sentiment - get to work each day... 🙂
And the sentiment was made clear to everyone in the following hours, as the Rand busted above R13.20/$ in the evening, 20c clear of where it was at the start of the day.
Strong US GDP figures, with growth of 1.2%, were said to have given the Dollar a boost, which (eventually) kicked it into action on Monday.
There has certainly been a lull in the Dollar's strength in recent times, with no fundamental explanation as to why.
Other events which were on Monday, was the SA Trade Balance and EU Inflation data.
These could also have contributed to the move...but who really does know?
Again - just follow what the charts are telling us - not the news!
Tuesday.
The Rand consolidated its way on Monday evening to recover to R13.16 - now to see what the next day had to offer.
If the market were to keep moving in line with our forecast, we would expect the Rand to keep running...
...and run, it did.
Before we even reached mid-afternoon, a jumpy market had reached up as high as R13.30/$!
Fears of credit rating downgrades were in the air again, and the ZAR didn't like the smell of it.
Neither did we.
The most likely date of decision from Moody's is going to be Friday the 11th of August. We will keep you posted on all we know here.
To get back to the news on the Rand...it endured a choppy afternoon where it strengthened back under R13.20, before weakening again.
Eventually, it ended with the Rand surfacing at R13.25 on Wednesday morning.
Snippets of News
The SA Reserve Bank (SARB) will likely cut interest rates further by at least an additional 25 basis points in the near future if inflation continues to track lower in line with expectations and remain well within the target band for the foreseeable future...
...this is the view expressed by Sanisha Packirisamy and Herman van Papendorp of Momentum Investments
The rand's extended losses on Tuesday, which saw it breaching R13.30 to the US dollar, was put down to credit rating fears resurfacing.
RMB economist Ilke van Zyl said a credit downgrade could trigger as much as $10bn worth of portfolio outflows from South Africa
Now Wednesday, our forecast day, was going to be a crucial one.
And from the outset, the Rand was on a weakening path, and reached its worst level for the day in the morning, of R13.31/$...
But then, things started to turn around.
The Rand had a wonderful afternoon and evening, making its way to a stronger position of R13.19.
A fairly quiet day came to a close, and it was ultimately a good one for the ZAR...
...although the local manufacturing index had fallen to 42.9, its lowest level since August 2009.
The other big event on the cards was speaker of the house, Mbete, having to make a call on the secret ballot before the 8th of August. It was going to be interesting to see what comes of this one, with so much riding on it.
Lastly for the day, was our forecast.
And the expected count was for the market to retrace slightly, moving into the R13.21-13.08 before then bottoming out and heading much higher, to R13.49-13.63!
If this wave count was valid, we were due for some action...
Click to enlargeAnd come Thursday, action is what we got!
Moving swiftly from the start, it was all one way traffic.
A few words describes it all: a low for the day in our target area (13.20), quickly became R13.42/$...
A loss of over 1.5% in value in just a few hours was not what the Rand needed, but was to have been expected, based on our forecast from Wednesday...
With the last day in the week upcoming, we had just one more day for the Rand to try to weather the storm so that it could start afresh.
In what felt like no time at all, over 50c had been lost.
Now, on Friday, the market opened at R13.35.
The big event for the day was Non-Farm Payrolls and Trade Balance due at 14:30, with little movement expected before the release.
Trump was expected to add 1 Million jobs in 6 months, with the figures also due later in the day.
As expected, things were quiet until the release...
...and when it did come, the Rand strengthened...briefly!
And then it weakened, and sharply too! Shooting up in no time to R13.4843 in the afternoon, EXACTLY in line with the forecast...
While it had certainly not been a good week for the Rand, it had been one as predicted, as it closed out the day trading around R13.40..
The Week Ahead (7-11 Aug 2017) |
A week ahead fraught with danger if this last one is anything to go by.
With speaker Mbete set to make a decision before the 8th, the pressure is heating up now on her to give the yea or nay.
Whatever decision it is, you can be sure of repercussions, as she has found herself between a rock and a hard place.
Not a nice position to be in.
In terms of events, we have plenty on the cards, and you would not want to look away anytime soon.
On top of that, we have all the hubbub of news coming from the US - there always seems to be a hive of activity which is governing the headlines.
What can we do to encapsulate all of this into simple, easy to understand information?
We ignore the news and instead trust our Elliott Wave based forecasts - and suggest you do the same.
Click here to try out a free trial for up to 28 days of all our forecasts
You won't be disappointed.
Best regards,
James
