Trade report 12/11/2013
ZAR outlook
USD/ZAR expected range: 10.3100 – 10.4400
It was a day of light trading volumes yesterday as the US celebrated Veterans Day, but as talk around the Fed introducing QE tapering before March next year increases, the pressure on risky assets including the Rand is growing. The ZAR had dropped to R10.4010/$ at 04:54 this morning, nearly 0.2% down from its close in New York yesterday and near its lowest level in 2 months.
Local news
The ZAR remains as fragile as ever, with its increasing current account budget deficits being a major vulnerable point. With an election year ahead, chances of the govt increasing interest rates are low. This in turn adds to the twin deficit issue, meaning this economic imbalance will most likely be a hindrance to the local currency well into the medium term.
International news
With speeches from two Fed members schedule for later today investors will be watching for any hints around the timing of QE tapering, after employment numbers released on Friday came in stronger than expected. Should the Fed comments be dovish, this may help steady the emerging market currencies currently under pressure.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2023 – R1bn; R2030 – R400mn; R214 – R950mn)
• 07:00 DE CPI y/y (final)
• 09:00 US Fed’s Fisher speaks on monetary policy
• 09:30 GB PPI output core y/y n.s.a
• 09:30 GB CPI y/y
• 13:30 US Chicago Fed activity index
• 18:00 US Fed’s Kocherlakota speaks on monetary policy
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