Trade report 24/01/2014
ZAR outlook
USD/ZAR expected range: 10.9400 – 11.0800
The Rand breached the psychologically important level of R11/USD yesterday. The ZAR also fell significantly against the GBP and the EUR reaching R18.2789/GBP and R14.9689/EUR respectively as strike action further dented investor appetite. With a possible taper at next week’s FOMC analysts are doubtful that the ZAR will be able to show a meaningful recovery in the short term. The ZAR was trading at R11.0200/USD at 06:35 GMT this morning, 0.2% down on its close in New York yesterday.
Local news
The current strike action by AMCU workers is taking its toll on the local currency as investors are keeping their distance nervous of a repeat of the violence that broke out at Lonmin mines in 2012. The government is meeting with AMCU and platinum sector representatives this morning in the hope that a resolution can be agreed upon. Adding to the ZAR’s woes are the high current account and budget deficits and the SARBs reluctance to raise interest rates. This leaves the Rand particularly vulnerable should the Fed go ahead with taper plans at the next FOMC meeting next week.
International news
There is no key data on the international side due for release today. This leaves the ZAR’s movements mainly dependant on local strike action updates. The markets will most likely be consolidating after the week’s events and investors will be keenly waiting for news from the FOMC meeting scheduled for next week.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
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