Friday 6 December 2013

Rand on the backfoot ahead of US nonfarm payrolls release

Trade report 06/12/2013

ZAR outlook

USD/ZAR expected range: 10.3500 – 10.5100

The Rand broke through R10.50/$ yesterday and fell to its lowest level in nearly 5 years as investors started selling off risky assets amid fears of an earlier than expected start to the Feds QE taper.  The Rand firmed slightly this morning and at 08:16 this morning was at R10.4400/$ and was showing no immediate reaction to the sad news of the death of former president Nelson Mandela.

Local news

The ZAR continues to underperform compared to its EM peers mainly due to its twin deficits and negative investor sentiment.  The JSE will be paused for 5min today from 11am as a sign of respect for former president Nelson Mandela who sadly passed away last night.  The markets have shown little reaction to this news, as it has been expected for some time, and Mr Mandela had not been active in the political scene for almost a decade.

International news

News that the ECB did not cut interest rates gave the Euro a boost yesterday while the Pound retreated as the BoE left interest rates unchanged.  All eyes today will be on the US non-farm payrolls data which should confirm the recent string of positive data and may give investors a better idea of the timing of the much speculated Fed taper.


TODAYS KEY DATA POINTS (GMT):

• 06:00 SA Net reserves (USD)
• 09:30 GB BoE/GfK inflation (next 12 months)
• 11:00 DE Factory orders y/y
• 13:30 US Nonfarm payrolls
• 13:30 US Unemployment rate
• 13:30 US PCE core y/y
• 14:55 US Michigan consumer confidence (preliminary)
• 20:00 US Consumer credit (USD)


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