Trade report 27/01/2014
ZAR outlook
USD/ZAR expected range: 11.0600 – 11.2300
Last week was a blow to the Rand as local strike action, on top of investor concerns over EM countries ahead of the next FOMC meeting, helped the currency sink to fresh 5 years low. At 06:55GMT this morning the ZAR was trading at R11.1480, already 0.5% down from its close in New York on Friday evening.
Local news
This week sees the SARB announce its interest rate decision on Wednesday. Investors will want to see a hawkish approach but economists generally suspect the bank will keep its repo rate unchanged at 5% due to SA households struggling with debt and high fuel prices. Meanwhile AMCU will continue government-brokered talks with mining companies today in the hope of reaching an agreement over pay disputes and ending the strike which is weighing on the ZAR.
International news
Emerging markets are under pressure this week as investors push back towards “safe haven” assets, over concern of Fed tapering at the next FOMC meeting. This concern is heightened as China, a key source of trade for many emerging markets, is showing signs of an economic slowdown. “We expect the Rand to remain at the mercy of emerging market sentiment over the coming week,” ABSA Capital analysts wrote in a note.
TODAYS KEY DATA POINTS (GMT):
• 09:00 DE IFO business climate
• 11:30 EZ ECB’s Constancio, BoE’s Cunliffe speak
• 15:00 US New home sales
• 15:30 US Dallas Fed manufacturing activity
• 18:00 EZ ECB’s Weidmann speaks
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