A Week For Importers As Rand See's Good Buying Levels.

OVERVIEW

Emerging markets benefit as the Dollar continues to struggle in it’s lowest levels since early August after a bad US Job market result.
The week’s expectation of the ECB reducing stimulus was fulfilled and the UK is flooded by a ‘ping’demic as their GDP figures disappoint.

sa markets

This past week was one for the importers to take advantage of lower buying rates, and if the trend continues then next week will bear the same good buying level fruit. News reports have calmed and ditched the stench of negative unrest and corruption momentarily, lets take a look at other factors playing to the benefit of our ‘Randela’.

Factors which played in the rand’s favour this week include:

A shock slowdown revealing a 7 month low of gains within last Friday’s US job market.
Markets digesting the delay in US asset tapering and pressure from the ECB expected asset reduction.
Emerging market impetus backed by market players reactions to the Jackson Hole Symposium talk.
Positive SA data such as improved GDP for Q2 and the country’s current balance expanding to an historic surplus of R343bn.

President Cyril Ramaphosa is set to give a talk in coming days on our lockdown status and the continuing alterations to our vaccination drive.
Any shock restrictions or stricter vaccine protocol could influence local markets positively or negatively depending on the nature of the changes.

What to look out for : US job data later and then next week we will start to see more talks and speculation on the US Monetary Policy meeting on the 22nd as well as our own SARB interest rate decision on the 23rd. Investors may show reluctance to make bids closer to the time and then flood the markets with volatility around those two days.

Technically – Having broken R14.20/$ improves the rand’s ability to test R14.00/$ and break lower to see buying levels last seen in June.
The dollar remaining soft and the USDZAR in a somewhat cyclical technical phase is opening the path towards USDZAR testing the psychological level of R14/$.
If we breach higher over R14.30/$ then we will retrace back up to R14.50’s. However currently the bias is downward and we expect to see a testing of R14.00/$ in coming days if US job data later doesn’t throw a spanner in the works.

european markets

Investors long anticipated the ECB meeting with focus on whether there would be scaling back on stimulus efforts.
And as expected the ECB will “moderately” reduce it’s pandemic inspired bond-buying program – it was cited that the effect of each covid wave are impacting the European economy less and less.
Their reduction of emergency assistance is however seen as a slowing of support rather than classified as a tapering.

The euro was little changed after the announcement but Europe is expected to open higher and finish positively in the stock markets this morning.
The EURZAR still remains under pressure as we open around the lows of yesterday, likely due to investors still feeling cautious over global recovery as well as concerns over the European growth outlook and rising prices due to inflation.

Technically – The EURZAR remains on a downward trend with no break upward as of yet as the pair is now testing the support of R16.75/€.
Breaking below this will open the floodgates to R16.50’s, but for now the pair may see resistance and today’s trading will give a clue as to whether there is a rebound upward or the pair continues to test lower boundaries around R16.60’s.

uk markets

The UK has been struggling with a ‘ping’demic, the NHS app tracks citizens and pings when you have come into close contact with virus exposed individuals.
Once pinged, a person needs to self-isolate – a flooding of pings and self-isolation has severely impacted corporates with huge portions of their staff isolating to the point of near shutdowns.

Affairs in the UK seemed to be on track this week after Bank of England governor Bailey stated that 4 Monetary Policy Committee members felt basic economic situations are improving and could be good enough reason for a rate rise.
Bond buying is expected to stay the same for the time being, however this morning’s UK GDP figures showed a stalling as a result of rising infections.

The UK GDP was expected to slow however it was worse than economists expected coming in at a mere 0.1% improvement.
The soft figures are attributed to the ‘ping’demic, supply in the UK being disrupted due to global logistical issues as well as a shortage of truck drivers, raw material and computer chip scarcity is also affecting the British markets.

Technically – GBPZAR fell along with it’s major peers against the rand. Dropping from a weekly high of R19.89/£ and seeing a low yesterday of R19.44/£. Staying below R19.76/£ means that GBPZAR is likely to range around these lower levels and should it break below R19.56/£ then we can expect to retest R19.40’s.