Trade report 17/02/2014
ZAR outlook
USD/ZAR expected range: 10.8100 – 11.9400
The ZAR has managed to firm up nicely over the last few sessions as the USD experiences a period of broad weakness. The main reasons for this are firstly signs of an improving UK economy and secondly recent softer data out of the US which has been interpreted as an indication that the Fed may slow its pace of QE tapering. The Rand was trading at R10.8580/USD at 06:54GMT this morning, very close to its close in New York on Friday and the second consecutive session where it managed to close below R11.00/USD.
Local news
The strengthening Rand is mainly due to international market sentiment rather than local at the moment and SA CPI data due out this week will unlikely have much of an impact. Meanwhile the current account deficit remains large as the recent rate hike was too modest to make much of a dent, but the SARB is very weary of debt-ridden consumers and needing to maintain a decent level of economic growth.
International news
Chinese sentiment has improved over the last week with upbeat data released indicating that January saw the highest volume of loans of any month over the last four years, which would suggest that the economy may not be slowing down as much as has been feared. This is good news for emerging market currencies and with it being a quieter day as the US markets celebrate Presidents Day Holiday, they should be able to consolidate their recent gains.
TODAYS KEY DATA POINTS (GMT):
• US Market holiday – Presidents Day
• O/N JP GDP q/q annualized (preliminary)
• 00:01 GB Rightmove house prices y/y
• 04:30 JP Industrial production y/y (final)
• 11:00 US ECB’s Nowotny speaks
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