Monday 3 March 2014

Ukraine crisis keeps pressure on emerging markets

Trade report 03/03/2014

ZAR outlook

USD/ZAR expected range: 10.7300 – 10.8800

The Rand enjoyed a mostly stable week last week and will be looking to hold onto those gains going forward, although increased tension in the Ukraine will weigh on investor sentiment.  The ZAR was trading at R10.81/USD at 06:15GMT this morning, just half a percent off its close in New York on Friday evening of R10.7575/USD.

Local news

A softer USD and upbeat sentiment over last week’s budget speech has allowed the ZAR to strengthen to levels around R10.70/USD, the strongest levels since mid-January.  What is concerning is recent trade figures released on Friday that show that the trade deficit has increased to R17.06bn from R2.78bn in December.  Today sees the release of SA vehicle sales data which may give clues as to the state of consumer spending in the country.

International news

Tensions in the Ukraine intensified over the week-end.  The threat of war in the area will keep the pressure on the Rand and all emerging market currencies as investors steer clear of risky assets.  The week ahead sees the release of key US payrolls data and PMI data which may bring some volatility to the markets.

TODAYS KEY DATA POINTS (GMT):

• 09:00 SA Kagiso PMI
•          SA Naamsa vehicle sales y/y
• 09:00 EZ PMI manufacturing (final)
• 09:30 GB PMI manufacturing
• 13:58 US Markit PMI manufacturing (final)
• 15:00  US ISM manufacturing PMI


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