Thursday 31 October 2013

Global appetite dips on FOMC announcement

Trade report 31/10/2013

ZAR outlook

USD/ZAR expected range: 9.8500 – 9.9900

The ZAR traded softer against the USD on Thursday after the FOMC announcement yesterday as global appetite dipped.  The ZAR was at R9.9420/$ at 09:42 GMT this morning but could come under more pressure today with many US and SA data releases scheduled, including trade data for September and producer inflation data.

Local news

Interesting to note is that the ZAR ended the day yesterday as the 2nd worst performing EM currency, behind only the IDR.  This highlights the fact that the ZAR struggles to capitalise on periods of lower USD resilience.  This is probably mainly due to SA’s large twin deficits, the threat of a ratings downgrade and negative investor sentiment due to recent labour unrest.

International news

The Fed announced yesterday that it plans to continue its $85 billion per month bond buying programme although comments that this is putting a strain on the economy suggest it may start tapering sooner than previously expected, although this is not the general market consensus.

TODAYS KEY DATA POINTS (GMT):

• 09:30 SA PPI y/y
• 10:00 SA Switch auction (R500mn of R201 to R186)
• 12:00 SA Trade balance
• 12:30 US Initial jobless claims
• 13:45 US Chicago PMI


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