This was a rather topsy-turvy week for the Rand, with the defining event being the US Fed announcement of increased interest rates for only the second time in a decade.
While this was expected by the market, Janet Yellen's expectation of a faster pace of rate increases next year caused some serious repercussions throughout the economic markets.
Much volatility followed, and there was no real calming of the markets from the start on Monday to the close on Friday
With a range of over 60c in the week, there was certainly no lack of action.
So let's get started with how it all happened!
How It Happened (12-16 Dec 2016) |
And so, Monday morning... a new day, a new week, a new start.
As we started the week, the sentiment patterns were not expecting the level of volatility which was about to follow, with the outlook (see below - click to enlarge) for the coming days showing us that we were to expect some weakening for the Rand, with a target area of just over 14.
Click to enlargeShortly after the forecast, the Rand moved close to R13.90 to the Dollar.
And then the fun and games began...
The Rand with little warning, began to strengthen.
Below 13.80. Then below 13.70. And further still, below 13.60 - and through our short term invalidation level.
In just a few hours, the market had completely turned around the expectations.
When the day officially ended, the Rand had made a best level of R13.53/$, a good 30c or more off where it was when the day began!
With our invalidation level having being hit, we needed to issue an updated outlook.
And so, on Tuesday morning, the next update was issued (see below - click to enlarge)
Based on the revised preferred wave count, it looked like the Rand was likely to strengthen further before finally bottoming out and rising.
Click to enlargeBut it seemed the Rand was not playing ball with Elliott Wave this week...
It was a little shaky throughout Tuesday, ending up just under R13.60 to the Dollar...
On Tuesday Fin24 released some interesting infographics for the year of 2016, showing which events shaped the year and how the Rand reacted in actual fact. A really interesting few pictures - you can check them out over here
Wednesday dawned...
....and the most part of it was pretty calm.
But the Rand was steadily weakening as the day went on, and by the time business closed, we were just short of R13.70.
And then the big news hit.
Our subscribers had got a warning due to our Rand Fundamentals, as the Fed was making a call on the interest rate decision on Wednesday evening...
...the news was a biggie.
And boy, did this make the Rand hop!
In 1.5 hours, it had lost over 25c!
It also did not show much sign of stopping...
So it had run our forecast close, but not quite validated it by a few cents, and then it had bottomed out very suddenly... this Rand was certainly keeping us alert and on the move!
By the end of Wednesday, it was trading at R13.95.
Thursday saw a follow through as the Rand continued to weaken
It was soon over 14.00. 14.10. 14.15!
By mid-day, it had made a high of 14.17 to the Dollar, before it consolidated 20c, and then recovered 15c back again...
Of interest, this was right into the original target area of our initial forecast on Monday.
...who would have thought we were trading just above R13.50 just a few days ago?
Thursday's short term forecast is still being played out now, and only our subscribers have access to it... Subscribe here to see it now
Thursday ended around the R13.95 mark with just Friday to come in the week...
And for the most part, Friday was pretty calm. It was a South African public holiday, but that doesn't normally have much effect on the markets.
As the day went on though, the Rand started to make a move, as it pushed back over R14.05 with some strong momentum as it was closing out the week.
As we ended another week on a bit of a bad note, what will the last two weeks of December hold in store...
The Week Ahead (19-23 Dec 2016) |
So as we recap and look ahead, this past week has been a difficult one for us and the Rand. Its volatility is what makes it one of the most traded and most watched markets in the world, as it is simply one of the most interesting!
And sadly, the end of the year doesn't look like it is going to end calmly either...
We saw what happened last year, and we have got a quick reminder this past week that we should be expecting the unexpected at all times.
In terms of economic events though, this past week was the biggie, with every kind of event cropping up (see below our Rand Fundamentals - click to enlarge)
Click to enlargeBut time goes on, events will start to slow throughout the remainder of the year.
As for whether the markets will take a break like everyone else, is another story altogether!
So as we head into what is normally the last business week of the year for those who did not already finish this past week, we should keep a watchful eye on the Rand as it makes its last few defining moves to end the year.
There may not be many business transactions being completed at this time of the year, but there are many persons who are trying to use their discretionary allowance before the calendar year ends.
(We have some more for you on this, coming in the next few days.
Keep an eye out for it...)
Seal your year off on a good note with our forecasts, to make sure you maximize your savings to gather all the cream you can. Try out our free trial today to get a roadmap for this last week:
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James Paynter
