March 05, 2024

Currency News

MyCURRENCY News | Week 10 2024

MyCURRENCY News | Week 10 2024

What we know

It’s common for written assignments, essays, and theses to have a cap on the maximum words permitted for submission.  Two of the main reasons for this is to encourage clear and succinct communication, as well as develop the skill to filter information and present only the most important elements.

Fortunately, no such minimum typically applies, meaning, that when news and information is in shortly supply, there is no obligation to ramble on simply for the sake of it.  As such, this week we simply have three points to make:

  • Having weakened out in the days following the budget, underperforming most currencies, the Rand has stabilised and managed to eke out modest gains to test the R19.00/USD level again.  It’s encouraging that the R18.80/USD – R19.20/USD range appears to have held, following concerns that the break through this range may have lead to greater losses.  GDP figures are out today, with inflation and the MPC rate decision later this month; however, we suspect election noise may be more significant for the Rand in the coming weeks and months
  • The main driver of the Rand’s fortunes remains the USD performance.  Whenever the USD weakens the Rand strengthens against most currencies, and vice versa.  The key economic event this year WILL be the moment when markets confidently forecast the timing of the first US rate cut and it’s stating the obvious to say that every Fed meeting brings this point closer.  
  • In response to this wait and see sentiment, volatility in the USD index (DXY) has tapered off over the past couple weeks.  With Fed Chair Powell speaking tomorrow and Non-Farm Payrolls out on Friday, we expect volatility to spike in the latter part of the week. 

What others say

Zero HedgeInflation: Back to the 1970s or the 1940s?

“The economy is not slowing down, it is reaccelerating.”

MoneywebReading through the hype of a reluctant budget

“Reading through the hype of a reluctant budget: It should have been an articulation of the soft and hard trade-offs that are inherent in managing the public purse.”

Business InsiderStock market today: US stocks close mixed as investors await this week’s Fed testimony

“US Stocks ended mixed on Monday as investors looked ahead to Jerome Powell’s testimony this week.”

What we think

Last week we wrote that “…from a trading point of view things aren’t looking good.  The trading range of the past couple of months has broken through the 19.20 top end, with the ZAR.USD currently trading 19.32.  It’s common for previous resistance levels to become support, meaning that 19.10 – 19.20 may become the short-term level beneath which the Rand may struggle to move.”

It was uninspiring, yet significant, price action from the ZAR last week.  Even though the gains were modest, it feels as though it was important to close below the R19.20/USD level again, with the sharp negative sentiment towards the Rand having seemingly subsided.  We now hope to see relatively dovish comments from Powell tomorrow, which together with soft NFP on Friday, would be a nice catalyst for Rand gains.

Our range for the week: R18.80/USD – R19.20/USD.

Have a great week ahead.