Rand News – Risk-Off Sentiment Knocks Rand.

OVERVIEW

Dollar strengthens against virtually all counterparts as the greenback reaches 7 month high off of tapering expectations and improved jobless claims data.

SA MARKETS

The possibility of asset-tapering has been talked about for quite some time however the confirmation of sooner than expected asset tapering shook the market this week.
The dollar was already on a high from it’s safe haven status given the turmoil in Afghanistan, port shutdown in China and delta variant infections rising globally – ironically the ‘hotspot’ being the US.

The rand being an emerging market currency is highly affected by these global fluctuations and uncertainties.
Even though our local inflation data came in softer this month, jobless claims in the US falling to a 17-month low adds confidence to the powerhouse economy.
Local riots, looming power cuts and the JSE going offline for the majority of Wednesday all added to our currencies vulnerability this week.

Technically – having broken the psychological level of R15.00/$ on USDZAR, levels open the path towards our current mornings open of R15.20/$ and should momentum persist as we move in the top end of our upward channel then R15.50/$ is a possibility next week.
Focus will be upon the Jackson Hole Symposium next week, if comments scare investors or are positive in terms of US policy then the rand can expect to suffer.

EUROPEAN MARKETS

The Euro, known as the ‘anti-dollar’ is expected to recover slower than the US and UK economies which is placing pressure on the eurozone.
There isn’t much market moving events upcoming on the European calendar with the only possible light coming in the form of German consumer confidence and inflation data.

The euro slid this week and stocks fell to their biggest daily loss in a month with covid-19 related fears and an influx of refugees.
Stocks related to China’s economy suffered as the crackdown in Asian markets continues affecting various sectors in Europe.

The EURZAR range is on a gradual but firm upward incline.
Within range is the strong resistance of R18.00/€, support is forming at levels like R17.66/€ and will have to be broken before we can see lower levels again.

uk markets

GDP is expected to improve around 7% in the UK, which would be the highest figure amongst major economies with it anticipated to top the Eurozone’s forecast of 4.6%.
Despite the pound falling the most since June against the dollar this month, the sterling is climbing against the developing rand.

Troubles of lingering Brexit issues have caused a chicken shortage, seeing franchises like KFC and Nandos having to cut their menus in the UK.
Furthermore, the kingdom is finding vaccines less effective against current strains and is now bracing for booster shots as virus woes continue.

Technically, with the current stronghold level of R20.94/£ already being tested on GBPZAR this means a climb towards R21/£ is within reach.
R20.82/£ will remain as level to drop below to see better levels. The pound has proven sturdy against the rand and is making a clear upward move towards R21/£.