And welcome to another intriguing chapter of our Weekly Rand Review...

...and another rollercoaster week goes by as the Rand was battling an uphill battle for the first half before managing to turn things around nicely.

Again, we saw the initial rout coming (as you will see)..

...which begs the question - DID YOU?

The week was marked poor economic performance data both domestically and abroad...

...while on the political front, Labour had a landslide win in the UK elections.

So plenty going on, so let's dig into some of the details

Key Moments (1-5 July 2024):

In some major headlines over the last five days:

• Wait-and-See SA Data: Local data releases show subdued activity over the election period.
• Subdued US Economy: PMI data and Jobs data continue to show a battling economy.
• UK Election Shake-up: Tories routed in latest UK elections.

The Rand had ended the previous week on a positive note, having regained lost ground to end the week around the R18.20 to the USD mark.

The question was of course, where to now?

Would we see the Rand regain more lost ground, or was the prior week's late surge, just a pause in a larger degree uptrend.

Well, our forecasting system was showing the likelihood for an initial test lower, but as long as we remained above 17.86 support level, the market was then expected to reverse and rise into the 18.65-18.95 area...

(Click to enlarge)

It looked like was going to be another interesting week!

And it started with a jerk on Monday, as the Rand opened a tad below R18 per US dollar, having gapped down almost 20c from Friday's close.

We then saw a tug-of-war as the market tested R18.09, then dropped to R17.94 in early trade...

...but then the Rand must have slipped in the mud, because it was basically one-way traffic after that for the day, with USD/ZAR shooting higher, hitting R18.20 in early afternoon and testing R18.40 after the SA desk closed before settling down in the mid R18.30s...

The day was also marked by disappointing Manufacturing Purchasing Manager Index (PMI) releases from both home and abroad:

• South Africa June PMI came in at 45.7 up from the prior month's 43.8, but the second month's contraction in factory activity.
• United States' PMI for June was 48.5 - the third straight month of falling manufacturing activity.

So rather a blue Monday for the Rand...

...but Tuesday wasn't much better, as the local currency took a further pounding, losing ground from the opening bell and continuing to do so throughout the South African trading session, as the market climbed all the way into our target area to hit R18.66/$...

But then the Rand seemed to finally find its feet and stop the rot, as it pushed back to end the day a couple of cents below R18.60 per US$.

Then Wednesday, the Rand finally got some oomph in its game as we saw the market initially retest above R18.60 before falling sharply, dropping 32 cents during the SA session to hit R18.30, before the market reversed to end the day 10 cents higher.

Again, further Purchasing Manager data from SA and US confirmed a battling economy, with SA's S&P Global PMI dropping below the 50 mark at 49.2...

...while the USA's ISM Services PMI also dropped below the critical 50 level to record a dismal 48.8, down from 53.8 in May and the lowest reading since April 2020!

In other news:

In a seismic shift that rocked British politics, Labour stormed to victory in the UK's latest electoral showdown, with the Tory conservatives, suffering their worst defeat in living memory, ending their 14-year reign with a whimper.

Labour's triumph, while decisive in Parliament, came with a twist - they clinched power with just 35% of the vote, the lowest ever for a majority government.

As the political landscape crumbled, smaller parties like Reform UK (with Trump ally Nigel Farage at the helm) seized their moment, capitalizing on voter disillusionment.

This wasn't just an election; it was a political earthquake that's set to reshape Britain's future.

But to get back to the Rand, Wednesday had seen an impressive turnaround...

...but it wasn't done yet!

Thursday saw the market test higher initially as it rose into the mid R18.40s, but then once again it reversed, as the Rand punched lower to end the day around R18.25/$.

And then it was Friday, which ended up being a whipsaw day as it initially dropped below R18.20, then rose above R18.30 ahead of US Non Farm Payrolls release.

The biggie for the week had a few surprises...

...with the US economy adding 206k jobs in June, below a downwardly revised 218k for May, sharply lower from an initial 272k with April reading also revised down by 57k to 108k - showing things are not as rosy as thought.

Also, unemployment rate rose to 4.1% in June - the highest since November 2021, surprising the market!

The poor data seemed to give the Rand the final say to push the market back down to the mid R18.10s to win the day...

...but unfortunately not the week, as the local unit once again lost ground from the week's start - although on a par with the prior week's close...

The Week Ahead (8-12 July 2024)

Some economic releases to keep your eyes on this week:

• SA: Manufacturing Production
• US: Fed Chair Speech, Inflation
• UK: GDP

So, the Rand's managed to regain lost ground at the later end of the week in an impressive performance - but can it continue where it left off??

We are watching some key levels this week , which will determine direction for the next week or two at least!

Safe to say though - the volatile times are here to stay!

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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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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