Welcome back to your next issue of our Weekly Rand Review.
And it's time to find out how our oft-battered currency has weathered this week’s market developments...
...which it did remarkably well, considering the headwinds both locally and internationally, with geopolitical uncertainty in the Middle East remaining high, as the proposed ceasefire in Gaza failed to materialise.
But somehow, with all that and some bad news back home, the Rand managed to keep a cool head as it fought back in the latter half of the week to hold onto its recent gains.
Let's see how it all panned out:
Key Moments (6-10 May 2024):
There was quite a bit going on the past week, with below being some headlines that caught our attention:
- SA Manufacturing Production Slumps:South Africa's manufacturing production had a surprising slump.
- Rate Cuts Stay On Hold:US Fed statements suggest no rates cut just hey, as Bank of England also marks time.
- Middle East Tensions Continue:Just when it seemed a ceasefire was at hand, it wasn't as Israel continued its assault against Hamas - and student protests in the US also persisted.
As dawn broke over the financial markets this week, the South African Rand found itself in a position that it has not been for months, starting a week below 18.50 to the Dollar...
...but if you thought it was going to be one-way traffic, you were mistaken!
Almost immediately, the Rand lost ground against the USD as the market pushed higher to touch R18.55/$ - before the SA trading desk have even opened...
But the local unit wasn't giving up such hard-won ground that easily!
It gathered some steam - and then some more - to drive lower over the day, managing to hit a new 5-month best of 18.37 around SA close...
...but could not hold on to these gains, as Dollar bulls managed to push the USD/ZAR higher in after-hours trade to close back above R18.45/$
Tuesday saw the Rand bounce around somewhat, as the market tried to find some direction, initially testing higher to hit 18.56 before reversing to find support around 18.44 before ending a rollercoaster day just below R18.50 to the Dollar.
Across in the US, Fed President Neel Kashkari disappointed any who thought US interest rates would soon reduce, as he noted that he expected US interest rates to remain unchanged under current conditions...
...but he didn't rule out a change either way, saying that any changes would be based on evidence of disinflation - or accelerated inflation...
While there were hopes of early rate cuts in 2024, it now seems they are not likely to turn around until at least the last quarter of this year. This could put pressure on the Rand, as investors favour the Dollar yields versus more risky emerging market currencies...
...and of course, delayed US rate cuts may also delay the Reserve Bank loosening the belt, which isn't good news all round.
Whether it took a while for the market to absorb the above news, or not, Wednesday was when the fireworks really started, as the local unit seemed to be caught napping, losing ground from the opening bell, and was kept retreating all the way through to mid-afternoon, as the market lost all of 18c...
...but just when it seemed that a rout was on the cards, the local unit managed to turn it around, as Rand bulls stepped in to drive the market sharply lower to close out the day back below R18.55/$!
Sjoe, and we were only half way through the week!
In other news:
- Middle East tensions remain at a high, after initial encouraging news that Hamas had accepted ceasefire terms. But any hopes of this reaching fruition were back to square one as Israel continued its assault in the Rajah region, despite aid being held back by Washington.
- And the pro-Hamas student protests in the US also seemed to gain some traction, with these not being restricted to campuses but heading onto the streets. As mentioned last week, this has all the classic tell-tale signs of organized election-year unrest, backed by organizations and persons who don't have America's (or humanity's) best interest at heart...
- And closer to home, the 'Hate Speech Bill' was signed into law by Ramaphosa last week. Not only is this unconstitutional, but is a very ominous and dangerous piece of legislation. Based on this legislation, someone preaching Christ as Saviour on the streets could be charged and jailed if this offended anyone. One step closer to full-blown Communsim...
Getting back to the Rand, Thursday dawned with the local unit once again losing ground to test above R19.60/US$ in early trade, but that was short-lived, as it thrust lower soon after the SA trading desk opened...
...and then kept the momentum going as it managed to drive the market all the way back to close around R18.45 to the dollar...
...as the rollercoaster week continued!
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This was despite the bad March manufacturing production figures announced by Stats SA, which came in at 6.4% lower than in March 2023 (shown above).
This drop followed five consecutive months of growth, including 4% growth the previous month. Despite the Easter holidays, the drop was unexpected as experts had predicted a slight growth.
Also, as expected, the Bank of England held interest rates on Thursday and stressed that a June cut would depend on upcoming data releases and the expected effects on inflation.
And then it was Friday, and what could the Rand pull out its hat?
Well, what about a mini-rollercoaster within a rollercoaster week?
And that's just what we got, as the market initially pushed about 6 cents higher, before Rand bulls once again stepped in to drive the market lower to almost hit the low of the week.
...before giving some ground back to end the day in the lower R18.40s!
But not before some extra drama to end the week...
The commission had earlier barred Zuma from representing his party because of his 15-month jail term, as Zuma continued his Stalingrad judicial stance, requesting that six of the judges recuse themselves from the trial!
Anyway, the Rand somehow managed to weather all of this with aplomb to produce another green arrow week - the third one in a row!
The Week Ahead (13-17 May 2024)
So after 3 weeks of Rand gains, what does this week hold in store?
There are a few potential triggers in terms of economic events, with most eyes being on the US once again, per below:
- SA- Unemployment, Retails Sales
- US - Inflation, Fed Chair Speech, Retail Sales
- UK -Unemployment
But that does not mean that there won't be volatility....
...in fact our forecasting system is suggesting we could be in for some interesting moves...
...which could take a few by surprise!
Please don't be one of them!
to make the RIGHT decisions...and take the RIGHT action....at the RIGHT time!
Hit the link below to get access to our latest predictions.
Until we meet again, keep your wits about you!
To give you a little helping hand, feel free to take our Rand forecasting service for a test-drive!
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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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