Welcome to another pulsating Weekly Rand Review as we track the South African currency's performance headed into more March madness.
And Wow!
What a week for the Rand, as it continued to power its way stronger through an action-packed week filled with plenty to digest both domestically and abroad...
...finally losing some steam on Friday, as US Nonfarm Payrolls once again provided a trigger for some sharp moves...
...which prompted a push to new all-time highs in the leading lights of US stocks, precious metals, and crypto.
So, how did this all play out?
Key Moments (4-8 March 2024)
Some highlights from the past week:
- SA Dodges Recession, but C/A Deficit Balloons: South Africa managed to avoid a downturn, but Current Account deficit balloons
- US Fed Chair & NFP Trigger Markets: Markets reacted to comments by US Fed Chair Powell and Non-Farm Payrolls
- BRICS Blockchain Payment System: BRICS announced an alternative payment system to the SWIFT system, which could hurt the US dollar.
- 3 Financial Markets Hit New Highs: Leaders of the pack in US stocks, precious metals and cryptocurrencies hit new highs
After a solid performance the prior week, where it had managed to bounce back from its post-Budget hangover, the Rand started the week around R19.05 to the USD in early trade as traders looked for direction in what was to be a data-filled week.
After a brief test above R19.10/$ soon after trade opened in SA, the Rand soon made its intentions known, as it pushed back down to test R19...
...and then pressed home its advantage to drop close to R18.95/$ in after-hours trade.
On Tuesday, the market reversed and pushed higher in early trade as traders positioned themselves ahead of the release of Q4 2023 GDP data...
...which brought a sigh of relief as South Africa managed to dodge a recession, with GDP rising by just 0.1% in Q4 2023, compared to the previous quarter's 0.2% decline and below the expected 0.3% growth.
...good news, but not great news!
But the Rand took heart, nevertheless, as it gained over 20c in the hours that followed to test below R18.90 against the Dollar - before losing some impetus after the SA desk closed.
And across the pond, it was Super Tuesday for both Republican and Democratic Primaries, with Trump again dominating and now seemingly headed for a rematch with Biden come November.
Wednesday was much of the same as the day prior for the Rand, as the market tested higher initially towards R19/$ but then reversed and pushed still lower on the back of news releases...
One of these was RMB/BER business confidence index, which fell for the second straight quarter to 30 in Q1 2024, compared to 31 in Q3 2023, signalling a growing pessimism among SA businesses.
The day was also marked by the start of US Fed Chair Jerome Powell's two-day testimony before a house panel in which he said the central bank would cut rates...
...but not just yet, noting that inflation had eased but remained above their 2% annual target.
Now, economists and fundamental analysts would have suggested this was Dollar-bullish, as it would keep interest earned higher for longer in US-based investments...
...but the Dollar Index (DXY) did just the opposite as it plunged lower to hit its worst levels in a month.
by mass human sentiment ... which is currently US Dollar negative)
Of course, the Rand got a boost, as the USD/ZAR followed in its slipstream, dropping below Tuesday's low to test just below R18.80 to the dollar...
...before again giving back some ground in after-hours trade.
Meanwhile, in other news this week:
- BRICS Announced a New Blockchain-based Payment System, providing a crypto-currency based mechanism that will be independent of the SWIFT international payment system, and allow member nations and other developing countries to settle cross-border transactions in the new mechanism, independent of the US dollar.
A timeline was not given for this, but with growing number of nations interested in the alliance, this could have significant implications for the US dollar in the longer term.
- S&P500, Gold and Bitcoin Hit All-Time Highs this week, with Gold breaking above December's high to hit new peak of 2195, while Bitcoin pushed briefly above 70,000 to the Dollar before retracing slightly...
Thursday dawned with the Rand market in the lower R18.80s...
...and once again, we saw a push higher before the news for the day hit, and the Rand reversed.
This time the trigger was the Current Account deficit, which widened sharply to R165.5 billion in Q4 2023, compared with a revised R34.4 billion in the prior period - and much worse than expected R92 billion shortfall. The trade surplus narrowed to R88.1 billion compared with R181.1 billion in Q3, with imports growing faster than exports.
Once again, by rights, the Rand should have weakened with this news, but instead did the exact opposite, as it thrust to new weekly lows to end the day under R18.70 to the greenback!
And then it was Friday, as the market awaited the big market mover of the month, the release of US Non-farm Payrolls data...
...with the Rand initially edging still lower in anticipation...
When it hit, the news was a bit of a mixed bag as the US economy created 275,000 non-farm payrolls in February, more than the 200,000 expected. But despite this, unemployment rose to 3.9% from 3.7% in January - the first increase in 4 months...
Once again, the biggie for the month jolted the markets - from stocks to forex, to metals, to crypto...
...including the Rand, which spiked down to R18.57/$ before reversing strongly, as it gave back 25c of its gains...
...before ending the day in the mid R18.70s to the Dollar.
Despite this, the locally currency had chalked up a second week in the green - and put on its best weekly performance for 2024.
And that was the wrap!
The Week Ahead (11-15 March 2024)
After a week full of data releases, this week is quieter in terms of triggers, but there are a few to watch:
- US - Inflation, Retail Sales, Industrial Production
- UK - Unemployment, GDP
As can be seen again from this week, these events are merely triggers for the market to move - NOT direction-givers.
For direction, we turn to our Rand forecasting system, which gives you a roadmap of where the market is likely to head based on the sentiment cycles currently in play for the coming days, weeks and months ahead...
...and take the RIGHT action...at the RIGHT time!
Hit the link below to get access to our latest predictions.
Until we meet again, safe trading!
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.
Simply use the link below to get access now.
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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(You don't want to regret not having done so this time next week...)
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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