Rand consolidates, gives up some gains.

The rand lost 1.4% against the dollar yesterday, as the trade war between US President Donald Trump and China over tariffs escalated. We expected some consolidation. Its important to remember the market is driven by speculative traders, big banks trading either the intraday volatility or taking short or long directional positions depending on whether they think the rate is going up or down. We opened the day around R 13,30 and closed off just below R 13,55 to the US Dollar.

Why are traders selling off their Rand positions? I think there was a lot of profit taking at that key support level of R 13,40 which is why we loitered around there for a while. This issue with Eskom and the unions dismissing the latest wage offer will almost certainly have a negative impact on investor sentiment.

USD/ZAR

Looking at the daily USD/ZAR graph, there’s a good chance we’ll push R 13,63 today, based on where there the market meets that short-term trend line. If the US CPI data due out later today comes in higher than expected, we’ll probably even break that line. I still think there is opportunity for the market to track back down to the lower long-term support line, but it’ll take a couple of weeks. I think our local buyers here need start thinking about their timescales and how to manage their FX exposure going forward. We’ll be sending out some information shortly with some ideas on how to reduce your risk going forward.

This Information is provided by fx paymaster. Our Daily Rand Traders view is intended to give you information about the foreign exchange market. The information contained in this currency report is based on our views and opinions. When trading you should always rely on your own judgement.