Trade report 28/01/2014
ZAR outlook
USD/ZAR expected range: 10.9900 – 11.1500
EM currencies in general have been under the whip as investors fear their ability to maintain economic growth at their low interest rate levels. This fear is heightened as talk about the next round of tapering at the FOMC intensifies. The ZAR fell to fresh 5 year lows yesterday but this morning has managed to firm up. The Rand was trading at R11.0910/USD at 06:51GMT this morning, 0.26% up from its close in New York yesterday at R11.2550/USD.
Local news
The ZAR has been one of the worst performing EM’s along with the Turkish lira. The lira has rallied today after news that its central bank has called an emergency meeting tonight which is expected to result in an interest rate hike. Locally the SARB is due to announce its interest rate decision tomorrow after its policy meeting and although a hike would be good for the Rand strength, economists expect the rates to remain unchanged as the SARB tries to support the ailing economy and consumers struggling with debt. Meanwhile strikes at the world’s top three platinum mines continue, equating to around R100m in lost revenue per day at market prices.
International news
US new home sales came in softer than expected yesterday, dropping from 3.9% in November to 7.0% in December m/m which may be a factor in deciding on the extent of the taper at the next FOMC meeting which starts today. In other news, the GBP has strengthened on stats released that show the UK has expanded by 0.7% in the last quarter of 2013, meaning 2013 was the country's best year since the start of the global financial crisis in 2013.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R2037 – 1bn, R214 – 350mn)
• 13:30 US Durable goods orders m/m
• 14:00 US S&P/Case-Shiller house price composite-20y/y
• 15:00 US Consumer confidence
• 15:00 US Richmond Fed manufacturing index
• US FOMC begins
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