Rand News – Rand Falters After SARB Talk.

sa markets

This week began with uncertainty over the progress of the global situation around covid-19.
Investors turned to the dollar as the safe haven currency since the US has been deemed better positioned to face the storm due to its earlier vaccination drive.
As a result, riskier aversion has developed towards vulnerable economies and emerging markets like our ZAR.

Political risk remained on a knife’s edge and has played against SA, leaving our currency losing ground against a greenback which extended gains across the board this week.
Even though volatility caused the dollar to end the week nearby to where it started, the USD still gained around 0.1%.

The event of the week for SA markets was yesterday’s SARB monetary policy meeting, the result of an unchanged rate was broadly expected amongst analysts and didn’t cause any ripples – however the statement given by SARB Governor Lesetja Kganyago cited how the current pandemic, lockdown and energy issues pose downward risk to growth.

Technically, USDZAR virtually opened higher each morning initiating a support above R14.50/$.
Yesterday’s speech of ‘balanced risk’ saw the pair move to highs of R14.76/$.
Moving higher than our current levels will signal the dollars impetus to move towards a R15.00/$, should markets settle then the possibility of falling to lower supports around R14.60/$ may occur. At the moment we remain range bound between R14.40/$ – R14.80/$ for the week ahead.

european markets

Global market players looked towards the ECB monetary policy meeting as the overall event of the week.
The anticipated European Central Bank meeting resulted in unchanged policy causing the bloc currency to fall 0.2%.

The dovish approach to policy reassured investors that there is no rush to raise rates until inflation exceeds projected levels.
The euro is under pressure as the ECB isn’t following the trends of other central banks who are tapering asset purchases, and eurozone PMI data which is to be released later will see if any stability is brought to the EURZAR.

EUR/ZAR remains out of our downward channel and is expected to extend its bullish moves but not gain a large amount of upward ground.
Breaking above R17.46/€ will signal a new upward shift, however this remains a strong resistance and if unbroken will see the pair range below this level.

uk markets

Pace of the UK economy beat estimates this morning as June UK Retail data showed a rise by 0.5%.
Thus showing an improvement of retail activity compared with pre-covid-19 levels.
More indications will come from todays Markit Services and manufacturing PMI data in Britain.

Food shortages and a steady increase in deaths in the UK due to the pandemic is weighing on the pound, more pressure will surely arise next week as the dollar takes center stage before the Fed talk.

GBP/ZAR stayed within our forecasted range for the week until yesterday after the SARB talk, moving above R20.20/£ to test R20.30/£ with the next top level being R20.40/£ should the rand weakness persist. Support is maintained at the psychological R20/£.