Welcome to another issue of Rand Insights - in what is shaping up to be a rollercoaster year of historic proportions.
And just 3 weeks in, we have already had some tasters of what is to come, as market sentiment was swayed by global events ranging from US inflation to historic peace deals.
Let's break down how the Rand performed amid all the goings-on.
Market Pulse 📊
- Price Action: R18.68-19.23 range reflecting continued volatility
- Technical Setup: Support broken at R18.90 with next around R18.45
- Momentum: Rand bullish bias with support being pivotal
- Risk Events: Inflation, GDP and peace deals took center stage
- Outlook: Trump administration and global drivers will dominate
Key Moments (13-17 Jan 2025):
Some of the more critical factors affecting price action this week:
- US Inflation Up, Retail Sales Down: US data disappointed on both fronts with rising prices and a slump in sales
- Israel-Hamas Peace Deal: A Trump-induced landmark agreement provided relief to global markets, reducing geopolitical risks
- Markets Recover, Plus Some ATHs: Stocks recovered globally, with some making new highs
Up, Up and Away...🎢
The Rand opened the week at R19.08/$ (the highest open since February last year) and was immediately under pressure, with the rampant Dollar Index pushing above 110 for the first time in over 2 years...
...and in the process, dragging the Rand to hit R19.23 before the lunchtime bell had rung.
But, just when it seemed the upward ride was going to go on for ever, the rollercoaster reached it peak, and then it fell in a stomach-lurching plummet...
...as the Rand gained over 25c, breaking below R19.00/$ in dramatic fashion before closing out the day around R18.98/$.
Sjoe, and that was just day one, without much to speak of on the economic releases, with traders positioning themselves ahead of inflation data, as well as events leading up to the US inauguration.
Of interest, our forecasting system had suggested a final thrust higher before topping out, with idealized target being in the 19.25-19.68 area, with a break below R18.82 confirming a reversal.
(click to enlarge)
The market indeed had thrust higher, but did not manage to enter our target area before revertsing...
...now it was a case of seeing if a top would be confirmed by the break below R18.82/$.
Rand Drifts Stronger
Tuesday was less of a freefall, but the Rand still managed to drive the advantage home after a brief sortie above R19.00/$, with the USD/ZAR drifting lower through the day to close around R18.87 to the greenback...
..as US PPI came in at just 0.2% MoM, lower than the previous month and market expectations.
Another Freefall Day
And the rollercoaster ride continued on Wednesday, with the market initally testing higher towards R18.95/$ in early trade...
...but this was short-lived, with the the SA session being marked by the next plunge lower - even sharper than Monday's...
...as the market tested below R18.85/$ before lunch, and then broke decisively lower to close out the day at R17.74 to the greenback - and in so doing comfirming a reversal (per our forecast).
A pretty impressive recovery in just 3 days!
More inflation data releases came out of the US with the inflation rate edged higher to 0.4% MoM and to 2.9% YoY, both pretty much in line with expectations.
And in other news...
-
Israel-Hamas Peace Deal (Ahead of Trump Taking Office)...
- The Average Daily Range was 18.3c or 1.1%
This equates to a potential profit or loss of R11,000 every day for every R1 million exposure - The Weekly Range (total fluctuation) from the highest (R19.23/$) to the lowest (R18.68/$) was still a signficant 55c or 2.9%...
...equating to a saving or loss of R29,000 for every R1 million exposure simply by taking action at the right or wrong time... - SA: Gold and Mining Production, Inflation, Retail Sales
- UK: Unemployment, Manufacturing & Services PMI
Following US-led diplomatic envoys, Israel and Hamas announced a ceasefire and the release of hostages on Wednesday.
Although it remains a fragile one, it is not just a coincidence that this comes just a few days from Trump's entering into office, and just a few days after him saying 'all hell would break loose in the Middle East' if hostages weren't released by the time he came into office.
It seems from reports close to the action that while the outgoing administration had put a framework together months ago for a peace deal, it was pressure from the incoming administration that made it happen...
...Russia/Ukraine coming next?
Stocks Recover, Dax & FTSE Hit ATHs...
Stock markets had a week of recovery after the prior few weeks of downtrend, with the British FTSE 100 and German DAX going one better by registering new all-time highs...
...so it seems we could head higher before this wild ride reaches its final peak.
Ending the Week With a Bang 💥
The Rand had a rather bumpy ride Thursday, opening just below R18.75/$ but then being pushed all the way back up to test R18.90 by early afternoon...
...before the Rand managed to claw back most of its lost ground to end the day around R18.77/$, as Retail Sales in the US came in at just 0.4% month-on-month - well below expectations...
...while across the pond, the UK managed to eke out year-on-year growth of just 1% (also below expectations).
A Bumpy Ride
And then it was Friday, but the Rand was not finished yet...
...despite the USD/ZAR's attempts to push back above the R18.82 resistance level, the local unit managed to rebuff these strongly, to finally win the day and close out the week below R18.70!
Not too shabby a performance...let's take a look at the stats:
Volatility & Risk Analysis
A less volatile week compared with last, with Monday being the biggest move of 23c
Which begs the question asked last week:
Were you hurt by these moves?
If so, we can assist by giving you the information you need to make better decisions...
...so you can take the right action at the right time!
Want to understand how the market actually works
- and how to use this to advantage?
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"Unpuzzling the Rand eBook" HERE =>
The Week Ahead
While Monday was just another day in Sunny South Africa, most eyes were on the US, with the Inauguration of President Trump.
Fortunately, all seemed to go off smoothly, but he certainly did not waste time in getting down to business, with a flurry of executive orders and actions to secure borders, destroy cartels, withdraw from the Paris Accord Climate Hoax (again) and the globalist World Health Organization (again), as well as bringing some basic common sense back into the world - like recognizing there are only two sexes...
...who would have thought this would ever needed to be stated in an official document?!
Expect a few more surprises coming out of the White House that could affect the markets and ruffle more feathers on the geopolitical scene in the coming days and weeks!
There are some potential triggers from economic data releases, the main ones being:
Whew, we are only just 3 weeks into the year!
Enjoy the ride of 2025!
And take care that you are making objective decisions, not emotionally charged ones!
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.
Simply use the link below to get access now.
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.
No charge. No card. All yours to trial for 14 days.
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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