Welcome to another issue of our Weekly Rand Review.

And this one was really a rollercoaster of ever-steeper climbs and drops, but in the end, as it did last week, the Rand managed to pull things back after getting the raw end of the deal for the first half of the week.

With conflicting economic data giving a mixed signal on the US economic health, and even more questions regarding the last couple of weeks' events, it provided the perfect opportunity for traders to climb in.

Fortunately, once again, our forecasting model gave us a heads-up on these moves, as you will see.

Without further ado - let's get into the nitty-gritty...

Key Moments (22-26 July 2024):

In some major headlines over the last five days:

• Inflation Improves: Local inflation improved, but is still above the mid-target range for SARB.
• Conflicting Picture on US Data: GDP surprised to the upside, but Durable Goods Orders slumped, as did Home Sales
• US Political Drama: More questions than answers as investigations into assassination ensue, and Democrats turn democrazy

The week started off with Rand solidly on the back foot, having weakened in the week following the assassination attempt on Trump, and the flight from risky assets as a result.

But the local unit had made a late recovery on the Friday prior, which alleviated the situation somewhat, allowing the market to open a tad above R18.20 to the Dollar.

Despite the pullback, our updated analysis of the composite sentiment cycles was showing that this was more likely a pullback rather than a change in trend, with the bias being for a move higher into the 18.44-18.66 area in the coming days (see below)

(Enlarge here)

It looked like it was going to be another week of turbulence...

...and it didn't take long for the market to show its hand, as the Rand almost immediately lost ground, pushing up to test R18.32/$ in early trade before the local currency managed to pull things back after the SA trading session.

But Tuesday was when the fireworks started, as the market opened in early trade at around R18.23 to the USD, but lost ground immediately...

...first slowly...

...then quickly (once the London players got in the game)

The poor Rand took a thumping, as the USD/ZAR hit 18.47 before there was some reprieve for the local unit, as it managed to close out the day around R18.37 per Dollar.

An interesting release out the US was that Existing Home Sales in June slumped 5.4% compared with the prior month - and the prior year - as median house prices hit a new record high of $426,900.

This is a bubble waiting to burst...

...and when it does, many will get hurt!

Wednesday belonged to the Rand, but it wasn't all one-way traffic, with the market initially rising to test R18.43 ahead of local inflation data release...

...which reflected an annual increase of 5.1% the prior month (the lowest in 6 months) and a month-on-month increase of 0.1%, much in line with expectations.

The news seemed to give Rand bulls some impetus as the market plunged 16 cents...

...and despite an 11 cent rally by the USD, the Rand had enough oomph to counter-attack and push the market back down to end the day just below R18.30/$....

But question was - could it hold on to these gains?

By then it was time for our mid-week update and we were as keen as any to see what the latest analysis would reveal...

And - once again - our sentiment-tracking crystal ball showed us that, despite the last day's performance by the Rand, nevertheless, the odds were stacked against it being able to capitalize on this, with our published forecasts (see below) showing a 70% likely move higher into the 18.49-18.66 area.

(Enlarge here)

It seemed the Rand rollercoaster still had more ups and downs and loops to go before we were finally through!

In other news:

It was another week of drama across in US politics:

There seemed to be more questions than answers regarding what happened with Trump's failed assassination attempt, as US Secret Service and FBI directors were called before Congress to delve into what happened.

The amount of stonewalling and lack of transparency, combined with many fishy coincidences, unexplained security decisions and lapses, conflicting information, plus whistleblower testimony all combine to not giving the public much confidence in these entities' own investigations - or their providing the public with the truth.

But this is not 1963...and with the technology currently at everyone's fingertips, from photos, to videos, to sound-clips, to timestamps and timelines, to internet searches, to sharing on social media...

...it will be difficult to stop the truth coming out in the end!

And then there is the Democrat presidential nominee circus - where a democratic primary campaign is run for months to ensure that the candidate with the most votes gets nominated to run for the presidency...

...only for him to pull out in fishy circumstances and endorse his VP, who then gets endorsed by other influential party members - all done outside the democratic process!

Expect more Democrazy in the weeks and months to come!

To get back to the Rand, we and our clients were expecting more Rand weakening going into Thursday.

And that is exactly what we saw, as the USD/ZAR shot out the gate from the opening bell on Thursday, pushing strongly higher in pre-SA hours and then a little further once the local trading desk had opened - managing to touch R18.53 to the US dollar, and a significant resistance level.

But just as it looked like the Rand was done, there were a couple of US data releases which seemed to trigger a reversal...

...with US Durable Goods orders slumping by 6.6% compared with the previous month, while GDP growth saw a surprising jump of 2.8% compared with the prior month's 1.4% growth...

...combining to show a conflicting picture of the economy's health!

This seemed to spook the market, and the Rand put on an impressive turnaround after lunch, as it all-but reversed all it had lost to end the day around R18.32 to the greenback.

And then Friday came with the Rand still having some juice in the tank to push still lower on Friday....

...in fact, enough to test the week's opening low, before giving back a few cents ground in late trade to close out the week in the high R18.20s.

Once again, just when all things looked very bleak, the local currency managed to pull some strings to end the week in a better state than it looked like at some points.

And with our forecasts keeping tabs on potential developments, there were opportunities for traders on both sides of the fence, whether importers, investors or traders.

The Week Ahead (29 Jul - 2 Aug 2024)

Well, that is pretty much the end of July, which means a week of potentially big trigger economic releases, some significant ones being:

• SA: Trade Balance, Manufacturing PMI
• US:Interest Rate Decision, Nonfarm Payrolls, Unemployment, PMI
• UK: Interest Rate Decision
• EU: GDP Growth

Apart from that, expect the unexpected in this 50 nation election year, with lots of shocks and surprises still to come no doubt.

Until next week, please keep your head in these volatile times!

We trust we can continue to provide valuable insights as we keep you informed...

Are You Making Informed Decisions?

To give you a little helping hand, feel free to take our Rand forecasting service for a test-drive!

This will give you access to the same charts we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.

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This will give you access to the same charts we are to give us and our clients the likely direction of the Rand - ahead of time, enabling you to make educated and informed decision.

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If you have any questions or feedback, please leave them below.

To your success~

James Paynter

P.S. Worrying about how to in manage your Rand exposures this year? Email me or give me a call on (041) 373-6310 or (087) 551 2848 - we would love to help.

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