So another week has passed, and another Weekly Rand Review is due.

And again, our Rand had another positive week, despite poor production and mining data, as it took full advantage of a stuttering US dollar, which had another dismal few days, coming with stock markets hitting new highs, and mixed economic signals.

Let us dive into the details.

Key Moments (8-12 July 2024):

In some major headlines over the last five days:

• SA Manufacturing Disappoints: Mining and manufacturing output both show a bleak picture.
• Mixed US Economic Signals: Inflation and consumer sentiment give mixed signals.
• Stocks Hit New Highs: Stocks hit new all time high in SA and US

Well, the week opened with the Rand around R18.12 to the US dollar, having come off the back of an impressive rebound...

...but the question was - could it extend this run or not?

Initially, it seemed like it could not, as the market pushed into the mid-18.20s before the SA desk had even opened.

But once it did, the ZAR found some traction and immediately reversed the flow and continued to push lower throughout the trading session, and then pretty much held onto gains to close out in US trade back below R18.10/$.

Tuesday was rather a whipsaw day, as the market first pushed briefly lower, then shot higher to retest the mid-R18.20s before the Rand once again pulled things back to end the day around R18.08 per USD.

Across in the US, Fed Chair Powell cautioned (ahead of release of interest rate data) that they did not expect it would be appropriate to reduce interest rates until they were confident that inflation was moving sustainably towards the 2% target.

Wednesday was another ding-dong battle, this time pushing up to test R18.15/$ in early trade before pushing lower to touch R18.05 to the Dollar but then losing ground to end the day back around R18.10/$.

So after three days, we saw the market pretty much just bouncing around, with the Rand having the slight advantage in the battle, having gained several cents overall.

But then the action finally came on Thursday, as some news releases seemed to provide some triggers for some decisive moves!

The Rand opened around R18.10 and initially tested briefly higher, but fought back and punched down to test R18.05/$ soon after the SA trading session opened before giving back some ground...

...which came amid the news that South African gold production had declined 9% YoY, while mining and manufacturing production had declined month-on-month by 0.6% and 3.2% respectively.

Some pretty abysmal numbers...

...and something that should have impacted the Rand negatively, right?

Wrong!

Instead, the Rand brought out its big guns after the news, as it blasted lower from around R18.12 to hit R17.93/$...

...and then managed to stave off a fightback from the US dollar to end the day a couple of cents below the psychological R18 level!

Of course, this was not all about Rand strength but Dollar weakness, with the Dollar Index taking a substantial knock, as can be seen above.

Inflation data out of the US came out later in the day, which showed a slowing in the inflation rate from 3.3% to 3% year-on-year - an encouraging sign, but still a full percentage point from the Fed's target!

In other news:

South African stock markets hit new all-time highs this week as the All Share Index hit 82104 before giving back a little, finally catching up with other global stock markets.

This came in a week where US stock markets also had a bumper session, with the Dow Jones, S&P500 and Nasdaq all pushing to new all-time highs.

The question of course is: How long will this bull market last??

Also, in other news, things seem to be getting quite spicy across in the US on the political front. With elections less than 4 months away, the Democrats seem to be in disarray following a fortnight of embarrassing gaffes by Joe Biden.

And in another twist, the Safeguard American Voter Eligibility Act (SAVE) Act, which was tabled to ensure that only US citizens would be able to vote in presidential elections (requiring proof of citizenship to vote), has been strongly opposed by Democrats in the House, the Senate, as well as the White House...

...this coming after millions of illegal immigrants have been allowed across the border for the past three years under the current administration.

Is this just a coincidence, or an exposure?

To get back to the Rand...

Friday was a rather uneventful day for the local currency, as the market bounced around in the R17.95-18.02 range for most of the day...

...but the Rand still had some gas in the tank, and managed a last thrust lower to end off the week in fine fashion, with the market just above the R17.90 per USD mark.

All-in-all, a rather satisfactory week for the local currency, and one which would have cheered importers, investors and consumers alike!

The Week Ahead (15-19 July 2024)

We have some pretty important releases coming out this week, which could provide plenty opportunities for for market triggers:

• SA: Retail Sales, Interest Rates Decision
• US: Fed Chair Speech, Retail Sales
• UK: Inflation, Retail Sales
• EU: Interest Rate Decision

So, once again, an impressive performance for the Rand, but we are approaching some key levels which will prove critical in the days to come.

Until next week, please keep your head in these volatile times!

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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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