Trade report 20/02/2014
ZAR outlook
USD/ZAR expected range: 11.0100 – 11.1600
The Rand slipped below the key R11.00/USD level late yesterday afternoon as emerging market sentiment took a turn for the worse. The ZAR was trading at R11.0625/USD at 06:07GMT, down almost 0.2% from its close in New York yesterday evening and the first time this week it has ended a session below 11.
Local news
Local data revealed yesterday that consumer inflation has risen from 5.4% in December to a higher than anticipated 5.8% in January. The ZAR initially strengthened on this news but this did not last long as investors started selling off emerging market assets. Ongoing strikes also keep the pressure on the Rand as they have now cost the economy an estimated R4.4bn in revenue.
International news
Two main factors have caused the recent sell off in emerging market assets. First being the poor data out of China. HSBC Chinese manufacturing data has fallen to a 7 month low in Feb of 48.3 as employment fell at its fastest pace in 5 years. Secondly speakers from the Fed yesterday re-iterated the positive outlook on the US growth economy and the FOMC minutes released pointed to the continuing of the Fed taper in a predictable steady manner.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE Producer prices y/y
• 08:30 DE PMI manufacturing (advance)
• 09:00 EZ PMI manufacturing (advance)
• 13:30 US CPI y/y
• 13:30 US Initial jobless claims
• 13:58 US Markit PMI manufacturing
• 15:00 US Philadelphia Fed index
• 15:00 EZ Consumer Confidence
• 15:00 US Leading Indicators
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