The Weak ZAR Continues...Is It Time to Secure YOUR Rands?

A new month, a new start.

But it did not seem to make any difference for the weakening ZAR.

As the week moved along, it seemed that the poor Rand was just consistently on the back foot, and was going to carry on losing ground for a while yet.

So, that begs the question - should YOU be investing your Rands elsewhere besides your South African bank account? To create security, you need to make the right decision.

For this reason, we are holding a webinar with Andrew Rissik of Sable Forex on "How to Secure YOUR Rands In An Insecure & Uncertain Future".

Andrew and I will be giving all the insight we possibly can into WHAT the future of the Rand is, and HOW you can plan for it.

This event is going to be one you don't want to miss.

it is free to join, and I would highly recommend you set aside the time.

Our forecast on Friday painted a picture of further woes for the Rand - a weakening into the 13.75-13.98 target area was expected within the next few days...

Click to enlarge

And the Rand reacted nicely in line with the forecast from Friday...with some newsworthy events providing some triggers along the way:

The events of note:

• Horrific Vegas Attack - a lone shooter leaves 59 dead and over 500 injured after a massacre at a country music festival in Las Vegas.
• Puerto Rico - the US has been forced to dole out billions to assist with the damage after the hurricane disasters
• ANC Policy Conference - this was actually from the week before, but we had to share it... 🙂
  A policy discussion turns to a chair tossing fight - is this a preschool children's party, or the political party who runs the country...? Click to watch the video
• Plenty of economic events - Fed speeches, ECB speeches, Non-Farm Payrolls and more!
• North Korea Tensions - this one is not going away anytime soon...

Monday began with terrible news the other side of the shores - a horrific attack in Las Vegas, USA where a lone gunman took out hundreds of persons at a music festival. A lone shooter, and yet the damage was as bad as 59 killed, and 500+ injured - what would make someone do something like this?

Despite that, it did not seem to affect the Rand in any positive way.

Starting the week at R13.51, it trended upwards over R13.66 by mid-morning.

A positive trade balance and growth in the private sector had supposedly spurred a comeback of sorts, but Friday’s budget deficit and the strong dollar further compounded the losses.

With a week loaded with events, the Rand was choppy on Monday afternoon, and eventually settled around R13.60/$.

...but boy oh boy, did the Rand jump on Tuesday - for no apparent reason!

Throughout the day, ground was lost, and in the late afternoon, the market made it as far as R13.77/$ - right in our target area again.

But the rollercoaster ride was not over yet! The market (with no events) proceeded to then dive under R13.65/$ during Wednesday evening.

So, with events nowhere to be seen besides the expectation of two interest rate cuts coming from SARB within the next 6 months, and a small Fed speech, we had seen the USDZAR move to its worst level since May.

Sometimes the triggers are the smallest things...so small that they are non-existent. (news does NOT move the markets!)

So with Wednesday having dawned, it was time for our next update. The Rand had hit our target area and had looked to have topped out in the short term...

...but our updated short term forecast showed the reprieve was expected to be short-lived with more woes for the Rand in the days ahead:

Click to enlarge

Another slew of events awaited us on Thursday & Friday -

• US Trade Balance
• FOMC Speeches
• Non-Farm Payrolls
• And more...

And it seemed that every bit of news was taken up as being Rand negative, as the Rand's losing streak gathered momentum:

Popular feeling was that the poor performance of the Rand was prompted largely by the cabinet reshuffle earlier this year. This in turn put a damper on business confidence, which then in turn put the local currency under strain...vicious circle.

Not only this, but other elements ail the economy -

The extended drought has done significant damage to crops and produce
The bird flu outbreak has caused the death of more than 2 million birds, and it is not over yet.

Yet, incredibly, despite this and the political climate, foreign investors are not yet running for the exist. According to JSE data, foreigners bought a net R69.5 billion of South African bonds (mainly the key R186 ten-year government bond) since the start of the year.

As for Thursday & Friday's events, the big mover was the Non-Farm Payrolls.

With the rand already on the back foot, Friday's event sent it spiraling over R13.81/$... within a whisker of our target area on Wednesday's chart...

On the plus side, the JSE made a record high of over 57000 on Friday as it was said to have benefited from the weak Rand.

The Rand still had some fight though, and managed to close out the week somewhat stronger at 13.71/$...

Monday blues for the Rand, as it the local currency started the week on the back foot, pushing back up towards Wednesday's target area (of course, we have issued an update since then...)

Expect a rocky road ahead this week for the Rand, with several economic data releases and statements this week.

Want to know where we are headed from here?

And why, and what to do about it?

Please join us this Wednesday evening at 7pm, for my webinar with guest Andrew Rissik of Sable Forex.

Andrew and I will be over-delivering and holding nothing back in giving you our insights into what lies ahead for the SA economy and the Rand - and what this means for you. Please join us by registering below:

Look forward to helping succeed~

Kind regards

James Paynter