Rand rallys but strikes likely to add pressure

Trade report 20/01/2014

ZAR outlook

USD/ZAR expected range: 10.7800 – 10.9200

The ZAR has managed to rally over the last two sessions and has been holding steady against the USD in early trade today.  But data out of China and the threat of strike action will most likely put pressure back on the local currency as the week progresses.  The ZAR was trading at USD10.8925/USD at 09:45GMT, slightly down from the R10.8700/USD at close of business in New York on Friday.

Local news

At a time when the Rand has been under intense pressure the economy cannot afford more labour unrest, but AMCU members are preparing to go on strike in the platinum and gold sectors over pay disputes from Thursday morning.  The news this morning that Q4 GDP growth in China slowed to 7.7% y/y from Q3’s 7.8% will also weigh on the local currency as this helps confirm expectations that China is headed for a gradual slowdown with China being South Africa’s largest trading partner.

International news

Today will be a quiet day in the markets as the US celebrates Martin Luther King Day, along with full market closure.   Key data is due for release from Thursday with PMI’s from the major economies while on the local side CPI data is due out on Wednesday.  Last week’s upbeat US retail and manufacturing data have investors fairly convinced that we will see another small taper at the FOMC meeting next week.

TODAYS KEY DATA POINTS (GMT):

•  US Market holiday (Martin Luther King Jr. Day)
• 02:00 CN Real GDP y/y
• 02:00 CN Industrial production YTD y/y
• 04:30 JP Industrial production y/y (final)
• 06:00 JP Machine tool orders y/y (final)
• 07:00 DE Foreign prices y/y

Foreign exchange South Africa  –  Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us

Want to know where the markets are? View our Live Currency Rates