And welcome to another issue of our Weekly Rand Review insights!
Talk about a week of surprises!
From Trump's stunning landslide victory to seismic geopolitical shifts and all-time stock and bitcoin highs, the last 5 days gave us enough plot twists to fill a bestseller!
The Rand navigated these choppy waters with fair resilience, but with some wild swings of note both ways along the way - in the end, finishing up pretty much back where we started.
Let’s break down how these factors influenced ZAR’s path and what’s on the horizon...
Key Moments (4 - 8 Nov 2024):
Some of the more pertinent headlines and events over the past week:
- Trump Landslide: A landslide victory triggers global markets and immediate geopolitical shifts ramifications
- Record Markets:Dollar, stocks and bitcoin make record moves following Trump victory
- Rates on Hold:US & UK Central banks hold rates steady
Monday: Pre-Election Jitters
The Rand opened the week at R17.52/$, with markets treading carefully ahead of the U.S. election and interest rate decisions later in the week.
Throughout the morning, we saw tight ranges as traders held their positions. By lunchtime, we'd pushed up to R17.57/$, but Rand sellers couldn't maintain the pressure...
...and we actually closed stronger at R17.47/$, suggesting markets were positioning for potential election surprises.
Tuesday: Rand Gains as US Votes
Opening the day R17.47/$, early trade brought disappointing news locally as SA's S&P Global PMI dropped to 50.6 from 51.0, showing a slowing in business activity, though still above the 50 percent mark.
The afternoon saw Rand-negative action as US ISM Services PMI surprised to the upside at 56.0 (versus 53.8 expected).
But despite this all, the Rand showed resilience, even as news around a potential Trump victory began circulating, as it managed to close in US trade at R17.37/$...
...and then the markets waited on tenterhooks!
Wednesday: Trump Landslide Rocks Markets
And then in the early hours, the news hit...
...Trump had won a comeback re-election - and by a massive landslide...
(and this before 3 swing states had even finished counting)!
The American public at large had spoken, rejecting the socialistic agenda and failed policies of the Biden-Harris administration...
...and giving Trump a clear mandate for a return to common-sense policies as well as a rooting out of the deep-seated corruption in Washington DC and its institutions.
For anyone who had been reading our Rand Review the past couple of weeks as to what had been happening with early voting data, this should not have come as a surprise...
...but for those that were listening to (and believing) the biased legacy corporate media hacks' propaganda and fake polls, this seemed to shake their world.
I think 5 November 2024 may well be the day the 'mainstream media' died, clearly no longer able to control the narrative and brainwash the public, which had instead turned to independent 'citizen journalism' as their source of information and news.
An interesting chart below from this Gallup article shows the degree to which confidence in the legacy corporate media to report news fully, accurately and fairly, has reached an all-time low overall, with a breakdown by leanings below...
But while some were in a state of shock, the markets seemed to take this as a major plus, as the US dollar surged across the board...
...and we weren't spared, as the Rand took a proper beating, rocketing up to R17.81/$ - the weakest point of the week.
Post-Election Domino Effects
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And just like that, Trump's emphatic victory and clear mandate for dramatic change and a clean-up domestically and abroad seemed to rock both financial markets and the geopolitical scene...
- Stock markets hitting record highs
- Bitcoin hitting a record high
- Hamas calling for an end to war
- Qatar kicking out Hamas leaders
- Zelensky having a call with Trump & Elon
- Trump having a call with Putin
- Putin being ready to end Ukraine conflict
- EU announcing they will buy U.S. gas
- Russia willing to sell oil in U.S. dollars
- Migrant caravan approaching border dissolving
- Mexico stopping migrants at U.S. border
- NYC Mayor ending vouchers for illegals
- China announcing they want to work peacefully with US
...with a whirlwind of 'happenings':
And all this within two days of the election results!
Some level of sanity has suddenly seems to have descended on the world at large...
Thursday: Inflation and Trade Positives
If Wednesday was about politics, Thursday brought monetary policy into focus.
Opening at R17.58/$, we got news that SA's Foreign Exchange Reserves had dropped to $63.03B, below the expected $64.0B.
But bigger news was coming...
Both the Fed and BOE delivered 25bp rate cuts to 4.75%, and while these were largely expected, the accompanying commentary sparked some volatility.
This seemed to trigger US dollar weakness - and the Rand benefitted as it closed out at R17.27/$ - the best levels of the week.
Friday: Sentiment Shifts - Again!
Just when we thought we'd found our feet, Friday brought fresh challenges.
Opening at R17.27/$, markets were caught off guard by stronger US Michigan Consumer Sentiment at 73.0 (vs 71.0 expected).
The US dollar found renewed strength...
...pushing us up to R17.65/$ before we settled at R17.59/$ - a fitting end to a week that reminded us just how quickly things can change...
...in financial markets as well as in the whole geopolitical scene!
Wow - what a week!
Volatility & Risk Analysis
So what did such a volatile week mean for you in terms of your forex risk?
- The Average Daily Range was 31c or 1.70% - which means that for every R1 million exposure the daily fluctuation (potential profit or loss) on average was R31,000 every day
- The Weekly Range (total fluctuation) from the highest point (R17.81/$) to the lowest point (R17.27/$) was 54c or 3.15%. This means by taking action at the right time you could have saved R54,000 for every R1 million exposure...
...while not doing so would have meant a forex loss of R54,000!
Wednesday alone saw a 44c range as Trump's victory rocked markets, meaning potential swings of R44,000 profit/loss per R1 million in a single day.
A week like this vividly highlights the importance of having an objective system for timing your hedging and conversions to enable you to:
- Mitigate potential losses and
- Take advantage of favorable market movements.
This is what we are here to give you!
Download your
"Unpuzzling the Rand eBook" HERE =>
The Week Ahead
- SA: Unemployment, Manufacturing & Mining Production
- US: Inflation, Retails Sales
- UK: Unemployment, GDP
As far as potential triggers, there are some economic data releases that could impact:
However, the over-riding mover will be how the markets digest and react to the implications of an emphatic Trump victory and what this means for the US and the world at large...
...with news that he had not only swept all swing states to give him a massive 312-226 electoral college win, but had also ensured a healthy majority in the Senate and very likely the House for Republicans...
...despite reported anomalies and shenanigans and slow-walking of final results in some places, most notably Arizona (once again).
To show the extent of Trump's landslide, it is helpful to see the results by county (see below), which clearly highlights, that apart from the notoriously liberal-leaning big cities, the country voted overwhelmingly in favour of Trump, including flipping counties in previous Democrat strongholds.
As for market reactions...
...already, the Rand has spiked above R17.90 (as we forecast on Friday), and Bitcoin has pushed over $80,000...
...it seems we are in for another week of major moves and surprises.
Expect the unexpected.
And please don't fly by the seat of your pants when making your forex decisions!
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.
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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.
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[/i4w_not_logged_in]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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