Trade report 05/02/2014
ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The ZAR has managed to maintain its recent gains on the USD, as it recovers from the volatility of last week. Direction seems to be coming from the general recovery of emerging markets as global sentiment has improved slightly. The Rand was trading at R11.1275 to the dollar at 06:49GMT, and hoping to remain steady while investors wait for further data which may provide clues regarding timing and extent of the Feds next taper.
Local news
The Rand is currently tracking other emerging market currencies which is helping it hold onto recent gains, despite the news of clashes between the police and striking mineworkers. Police fired rubber bullets and stun grenades to disperse 3000 striking workers at Amplats shaft yesterday. Looking long term the Rand is in a tricky position as further interest rate hikes are needed to reduce its twin deficits, but this would reduce inflows to bonds, which is needed to help prop up the Rand in the short-term.
International news
ADP employment data and ISM non-manufacturing PMI data are due for release from the US today, which investors will be watching for to provide further clues on the US growth trajectory, which in turn gives investors a better idea of what the Fed’s next move might be in regard to further tapering and to what extent. The Euro has gained on the GBP this morning after PMI data came in better than anticipated, and it is hoped that the region is starting to put the debt crisis behind it, although unemployment levels remain close to record highs.
TODAYS KEY DATA POINTS (GMT):
• 07:15 SA HSBC/Markit PMI
• 08:55 DE PMI services (final)
• 09:00 EZ PMI services (final)
• 09:30 GB PMI services
• 10:00 EZ Retail sales y/y
• 13:15 US ADP employment change
• 15:00 US ISM non-manufacturing composite PMI
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