Welcome to this week's edition of the Rand Review..

Welcome to this week's edition of the Rand Review. The past week was another rollercoaster ride for the Rand, with both local and global economic factors creating a volatile environment.

Locally, the inflation rate fell close to SARB's target level for rate cuts. Meanwhile, global developments, including a major revision to U.S. employment figures, Fed minutes and record gold prices, all added to the uncertainty. And just when it looked like the Rand was going to tank badly, back it came with a bang with a late flurry.

Let's dive into how these all shaped the Rand’s performance and what we can expect in the coming days.

Key Moments (19 - 23 Aug 2024):

To give some of the key headlines and events over the past week:

• Mixed South Africa's Data: Inflation dropped last month, prompting hopes of a rate cut next month, while the business cycle indicator showed an unexpected decline, raising economic concerns.
• Gold Hits New Highs Amid Economic Uncertainty: Gold prices soared to new highs during the week, highlighting a shift towards safe-haven assets.
• Whopping US Jobs Revision : A huge revision by the U.S. Bureau of Labor Statistics highlights a much weaker labour market - and prompts questions.

Monday kicked off with the Rand having come off an outstanding week, and it was a question whether it could continue its stellar performance...

... or whether it had run out of gas.

Opening around R17.85 versus the Dollar, it was soon at its volatile best, testing lower, then higher, before Rand bulls took control, pushing the market to new yearly lows before closing around R17.69/$, as the market looked ahead to potential triggers later in the week.

Tuesday was a wake-up call for those who thought this was going to be a repeat of the prior week.

Even with the Gold price hitting new highs and the Dollar falling (which historically would have been Rand positive), the Rand lost all the ground it had made on the day prior, as it ran all the way back up to test Monday's high of R17.88/$ before managing to pull things back in after-hours trade to close out around 10 cents lower.

Wednesday was another whipsaw day, with the market pushing higher after local inflation data release, which showed an impressive drop from 5.1% last month to 4.6% added some positive sentiment, with hopes of a much-needed rate drop next month.

The Rand weakened to hit a peak of R17.95/$ before closing at R17.82/$, with Fed minutes revealing a possible rate cut is on the horizon, which seemed to put both the Dollar Index and the Rand under further pressure, leading to increased volatility.

In other news:

• The Bank of Japan announced this past week its intention to integrate Ripple's XRP into all its cross-border payment systems. This decision marks a significant step towards mainstream adoption of cryptocurrency technology, with implications for the broader financial market.
• The US Bureau of Labor Statistics made a shocking announcement this week that monthly payrolls were overstated by a whopping 818,000 - the largest downward adjustment in 15 years!
• As you know by now, we have been very skeptical of the published Nonfarm Payroll figures during the current US administration, as they did not tally with the reality of an economy that was clearly under duress.

  It seems our skepticism was well-founded from this article and chart by Mishtalk...

As can be seen, it seems even the 818,000 seems to be understated - it is more like 915,000 - and from the chart, the current administration has increasingly overstated job creation the past couple of years...

...surprise, surprise!

Which begs the question: How can such huge discrepancies occur without this being intentional? And what else is the public being told that is not factual?

Getting back to the the Rand, Thursday saw some significant fluctuations, reaching a high of R18.06/$ amid weaker-than-expected UK retail sales data and ongoing global economic concerns...

...underscoring the market’s sensitivity to international developments and investor sentiment.

And then it was Friday, and as the Jackson Hole Economic Symposium commenced, the Rand made a dramatic recovery, as the Dollar hit new 13-month lows, with the local currency dipping to test the week's lows and close out below R17.70/$.

And to end off the week, it seems the election year political scene continues to surprise, with independent US presidential candidate Robert Kennedy Jr suspending his run for the White House to put his weight behind Donald Trump's campaign, with a promise to help clean up the health & pharma sector (and perhaps some other 3-letter agencies)...

...seems there are new twists every couple of weeks in this election cycle!

And that’s a wrap on another wild week in the markets!

The Week Ahead (26 - 30 Aug 2024)

This week, there is not much in the way of economic releases locally, with Durable Goods Orders and GDP Growth in the US being potential triggers, as well as Euro Area inflation and UK House Prices being of interest.

The Rand has been putting on an Olympic-like performance, coming from behind last week to storm back down the home straight,. But as we know, you cannot just extrapolate last week's move and expect the same this week - especially with the Rand!

But as always, we’ll be here to guide you through whatever lies ahead.

Until then, keep your wits about you and stay informed!

Are You You Taking Action At The Right Time?

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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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