Rollicking Rand has investors in a spin!

What a chaotic week for the Rand, as it was thrown from side to side, upside down and the right way up!

A week of events, mostly outside of the country of South Africa, seemed to have an awful effect on any stability the Rand has managed to cobble together over the past while.

But it was not all bad news for the Rand...

...President Trump managed to keep Dollar weakness at a good level, and the Rand managed to get a few body blows in too.

But WHO was the winner of the week?

Well...

Difficult to call that one.

But we can definitely see who the loser of the week was: Investors in South Africa,with this kind of volatile movement unsettling and unnerving for all.

Not news which South Africa wants to hear right now.

But on we go. Lets review how it happened, and see if we can decipher the upcoming week.

After a fantastic previous week, the Rand was now on the front foot heading into Monday. The mood around the market was excellent, as it had strengthened consistently over latter period of the week.

So with morale high, the Rand started the week.

Of importance - our our forecast times have now changed from a Monday and Thursday to a Friday and Wednesday evening around US market close (11PM SAST). This helps our clients have the information they need when they arrive at the office on a Monday and a Thursday morning.
So our forecast from Friday was in play - and the outlook showed the market at R13.3783 with the bias still being for the market to fall further. The target area was R13.20-13.04...

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...and when the business opened on Monday, the Rand sat at R13.34 to the Dollar.

And right away, the Rand was on the run.

It has been a strange period for the Rand where the political landscape has been on the quieter side in the country, but the US has been humming with activity.

Regardless, the Rand seems to have been reaping rewards from this period, as it moved swiftly to reach sub R13.20/$ levels by mid-afternoon!

This was smack into our target area, as per our forecast from Friday, meaning our subscribers had once again had the best information possible to make a decision.

After US inflation and retail sales figures fell below expected levels on Friday, economists put this day of further rand strength down to that...

...we didn't know if it was true.

But the market did move in line with our forecast, and that is all that counts.

Other news was the chance of interest rate hike in June falling 14%, but still to a probable 70%...

Anyway. Enough of the economic noise. Roll on Tuesday.

The Rand had continued its run in after hours trade in New York, and by the time Tuesday began it was sitting around R13.17 to the Dollar.

All eyes still on the US of A, with South Africa really taking a back seat in terms of events affecting the market...with the USD was trading over 1.10/€ (a key psychological level) for the 1st time since the Trump election, which was a quite startling indication of how weak the greenback is currently.

Anyway...the Rand continued to take advantage of this favorable period...with many wondering when it will end!

The market strengthened gently throughout the day, and after the US Market had closed it continued onwards until it made it to R13.03/$ around midnight SAST...

...and that was as good as it got.

For now, anyway.

The Rand turned around fairly smoothly at that point, and it was soon evident on Wednesday morning, that we had bottomed out.

Alright - mid week milestone achieved, and we were running onwards into Wednesday. A quick recap of the week:

The Rand had hit a great vein of positivity, purely from Dollar negativity. This has meant it almost broke below R13, touching R13.03/$, in the first half of the week.

Now Wednesday, was here.

The news for the day was further decreasing of the possibility of the June Fed Rate Hike (more news coming from the US and not SA), and more controversy around the Trump/Comey/FBI story which continues to develop.

Such was the positivity of the Rand, that Fin24 released an article with "7 Reasons Why The Rand Remains Robust" citing everything from domestic economy recovery, to inflation falling.

One interesting point from that article was the exact same one which we covered in our recent webinar: what history tells us as to what happens to currencies after a credit ratings downgrade to the feared #JunkStatus. Both Brazil, Turkey and Russia all saw strength in their currency, post this landmark milestone.

But once again...

...enough of the news, and onwards to the real story.

Wednesday was when things started to turn on the Rand, as it began to confirm its bottoming out toward the end of Wednesday, pushing over R13.15/$...

At 10:30PM, we released our next forecast for the USD/ZAR and showed the outlook for the coming few days. With the market sitting at a pivotal point of R13.2011, and a very close count of 50% to Count #1 and #2, but both indicating that we will see more Rand weakness initially. The key level of R13.4101 was the one to watch for confirmation of the way forward.

So as our initial forecast was validated, the next one was due. Now to see where this one takes us...

One thing was for sure - the market had turned...

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...and during the night, the market went further North.

So much so, that it touched a high of R13.40 to the Dollar during the early hours of the morning, before stabilizing back to sub R13.30 levels by the opening of business on Thursday. It had not quite

This was very close to our forecast, as the market had bottomed out right at our target area. Our subscribers were thankful for this, and it is always encouraging to receive emails like this one from Jan, as it means our clients are getting value:

"I subscribed to the free forex trial from Dynamic Outcomes (USD/ZAR, EUR/ZAR, and GBP/ZAR) on 1st May 2017. In this short period the forecasts have already helped me make better decisions with the marketing of my product (grains). I would recommend the forecasts to anyone that's exposed to Rand volatility."

Thursday looked like it may just be the turning day when things started to happen...

And it sure was.

The Rand had been jumping around like a jack-in-the-box overnight, and the opening of the market in South Africa was not going to slow it down at all.

It didn't.

In fact, it sped up.

The rand weakened more than 2.5% to trade over R13.58 to the dollar just during the first half of the day!

Right into the middle of Count #2's forecast...bingo!

The dollar took strain from reports on President Donald Trump's ties to Russia and as his axing of FBI director James Comey came under scrutiny...

A swing of 55c from midnight on Tuesday, just 36 hours later...

So...what next?

Well, what do you think?

The unexpected!

The market topped out, and in just a few hours was trading well below R13.40/$!

Whirlwind stuff, leaving uncomfortable investors and businessmen, befuddled economists and general worry...

The market then managed to sort of stabilize for the night, around R13.40 to the greenback.

Phew.

What a strange game this is...

In amongst the major trend of sentiment, we get these smaller bubbles or pockets of time, where there are swings in sentiment. These are points within the main market direction, and in some ways inconsequencial. We just saw one today, as everyone was crying out against the Rand around mid-day on Thursday.

But that is exactly when the market turns! Contrary to popular belief, and general feeling, the market turns.

And that is what it did - everything had changed, and the Rand was back on a strengthening note again.

In political news, reports emerged alleging Brazil President Temer attempted to bribe witnesses in the Country’s latest corruption scandal...and the news saw the Real plummet 6%.

Alongside that, the calls for impeachment of President Trump increased as the Democrats continued to make a biased mockery of themselves...

As for the Rand - it shut out the noise and strengthened with aplomb throughout the day, rushing its way from R13.40 down to R13.21 by the close of the day. All in all, from the start of Monday to the end of Friday, the Rand had actually strengthened 15c!

What a week...and now to look into the crystal ball for the one ahead.

As Trump leaves American shores for an overseas trip, many believe the Dollar is going to breath a sigh of relief as he won't be quite as active as he has been over the last few weeks!

From the South Africa side of the pond, things have been quiet for some time now.

But bad news hit the country this past week, as GM announced they will cease all local manufacturing and supply of Chevrolet cars in South Africa. Many pointing to a struggling economy and political instability making it a logical decision.

It seems we are left with a strange situation, with negativity in South Africa vying against negativity in America, and the market left in the middle of the tussle.

It sounds confusing, and it is confusing.

We cannot make predict what the next step of the White House or Zuma will be.

But we can provide some probability in market market direction. And that is what counts in this game.

I would like your feedback and questions if you have any.

All the best,
James