Welcome to our Weekly Rand Review for 12 September 2016, where we take a look at how things unfolded last week and give you our thoughts for the week ahead.
"I did not see that coming..."
Many people felt this way, as the Rand turned on its head this past week.
Twice.
Not only had it calmed and stabilized after the hectic prior week, but it strengthened well beyond the R14/$ mark, as it began undoing the disastrous previous week's movements. However, it then turned right back, and was trading at over R14.40/$ this morning.
Despair and panic changed to optimism and positivity...and then back to despair and panic. How? And why?
Maybe we can get some idea as we take a look at the week's movements...
How It Happened (5-9 Sept 2016) |
Monday morning's forecast showed rather a shocking outlook... one that was totally contrary to expectations.
Click to enlargeThe Rand to strengthen between 25-60c in the next few days?! Surely not?
Very hard to believe, yes. But, as we (and our subscribers know), you can choose to discount Elliott Wave-based forecasts, but it will likely be at your peril...
The Rand was fairly calm on Monday, as we saw it slowing strengthen throughout the day. However, there was no very definitive movement during the day, and it left our forecast yet to be validated by the close of the day. A good day, but Tuesday was going to be an important one.
Tuesday dawned... And boy, did the Rand come to the party!
The markets had been turned on their head. Many were left scratching their heads as to how things could have changed so quickly.
The move was put down to a 3.3% growth in SA's GDP, which was more than expected and a vast turnaround from last quarter's 1.2% contraction.
Surprising news. Surprising market turnaround.
That is, for some.
Those who had received our forecast would have known exactly what was coming - if you have any Rand exposure, you would appreciate the benefit of having information which is keeping you a step ahead of the game.
It also is perhaps worth mentioning that the politics in South Africa had quietened down, as Zuma and Gordhan visited to G-20 Summit in China. Quite amazing what can be achieved when there is no political interference going on!
Early on Wednesday morning, the Rand broke well below the R14/$ mark, touching 13.90 to the Dollar, after which it retraced a bit, back toward 14.10. The markets continued to track sideways for the remainder of Wednesday and Thursday morning.
On Thursday morning, our next forecast was due. Our outlook showed (see below - click to enlarge) that we were expected to see some further Rand strengthening before it bottomed out.
Click to enlargeAnd once again, the Rand followed our predictions precisely (not only against the Dollar but the Euro and Pound as well), moving down to make a new low of R13.83 to the Dollar, before it once again began to weaken out of our target area.
The party was over, and before you knew it, the Rand was back above 14.00. Then over 14.10. Then 14.20.
And finally on Friday afternoon, it punched above R14.50.
A near 60c turnaround from Thursday!
Movements were put down to fears of US interest rate hikes and the news that Pravin Gordhan had in fact met with Gupta-owned companies just a few months ago. Knowing the Gupta's reputation, this cast a lot more doubts over the Pravin case, as to whether he really was innocent or not.
Another week ended in worry and assumptions, as no clear pathway was still visible for most involved in the foreign exchange market.
The Week Ahead (12-16 August 2016) |
After such a stark turnaround in the first half of the week, all good movement had been lost, and people tend to have a pretty glum outlook for this next week. Sentiment is not good as more rumours and assumptions are flying around Gordhan, calling for "the chop" to come. Whether this will happen or not, remains to be seen.
Some big events are due this week, and they are well worth keeping an eye on. Such things can catch you out so easily, if you do not know what is happening.
So, for this next week... What is the outlook? Are we retracing? Are we weakening further?
If you have any forex exposure, you need these questions answered and you need a gameplan.
As you saw last week, our forecasts were nothing short of a reflection of what was going to happen. These could have saved you a packet, had you known what was coming
...not to speak about saving you time, stress, worry and sleepless nights!
For your own sake, you need an objective view of where the Rand is heading, not an emotionally-charged one.
We published a forecast this morning with the outlook for the next few days. Just click the button below to see how things are going to work out this week
For those of you who are not subscribed to our forecasts already:
As always, I would love to hear your comments and feedback - please leave a comment below.
To your success~
James Paynter
