July 04, 2023

Currency News

MyCURRENCY News | Week 27 2023

MyCURRENCY News | Week 27 2023

What we know

The rand is still in a much better place than it was a month ago, despite giving away a chunk of its gains recently, drifting from R18.12/USD all the way up to R19.04/USD by Friday the 30th of June. However, it is important to bear in mind that despite any recent upticks, the rand has made good ground from the highs of R19.92/USD. I often think that the USDZAR would be a great platform for psychologists to study the impact of the recency effect on individuals, because no matter how large the ZAR’s gains may have been, the most recent movement will have the strongest influence on their decision¹.

Speaking of recent news, our dear President has been cleared of any wrongdoing by the acting Public Protector with regards to his involvement in the Phala Phala scandal – the judgment will however undergo vigorous scrutiny by the Constitutional Court and we can expect this to run on for some time. This, in conjunction with the 4th of July long weekend saw the USD make a push stronger to the already mentioned level of R19.04/USD. We can only assume this was as a result of American traders closing out their positions before heading out to enjoy a case of Bud Light, or whatever else passes as beer in the US.

We don’t really believe in ‘jinxing’, but that doesn’t mean we’re not hesitant to bring up loadshedding, because at current levels, things seem, dare I say it, bearable. It’s certainly not reflecting yet in our business confidence which hit just above the 3year low of 27 points at the beginning of June. We will have to wait and see if this can continue at these levels of loadshedding (or better) and see the positive impact while we try and make up lost ground across the board.

What others say

IB Times – Ukraine Will Have ‘Most Modernized Fighting Force’ In Europe After Russian War, Expert Says

“Since Moscow invaded Ukraine in February 2022, NATO has sent Ukraine thousands of weapons and equipment to use in its war. Commitments made by the United States alone between Jan. 24, 2022 to Jan. 15, 2023, have already amounted to $46.6 billion.”

Reuters – Beijing jabs in US-China tech fight with chip material export curbs

“China’s commerce ministry said on Monday it would control exports of eight gallium products and six germanium products from Aug. 1 to protect national security, a move analysts saw as a response to escalating efforts by the United States to curb China’s technological advances.”

Daily Maverick – Ramaphosa must seize the moment given him by the Phala Phala exoneration and strike fast

“Now is an opportune time for the President to ride the wave of his exoneration and celebrate the considerable reduction of the threat posed by Paul Mashatile’s presidential ambitions. He should now feel free to deliver on his unity, renewal and anti-corruption promises.”


What we think

Last week we said that “releases will start to pick up again in the coming weeks, followed by what is traditionally a fairly quiet period as the Northern Hemisphere Summer moves into full swing. We would expect volatility to remain fairly elevated over the next month or so”.

With today being Independence Day in the US, liquidity is expected to be thin globally for most currency pairs, and therefore for movements to be subdued, at least until their return on Wednesday. Despite the seemingly slow start to the week, the rand has been able to sneak in some gains, moving from an open of R18.80/USD on Monday morning to R18.60/USD by Tuesday afternoon. There are two major US news events this week that will be driving sentiment. The first will be the FOMC minutes which come out at 8pm on Wednesday evening and then followed by the hallowed Non Farm Payroll numbers on Friday afternoon. Expectations are for a further reduction in added jobs in line with rising US unemployment which will start to sculpt forward guidance regarding the Fed’s pending interest rate decisions.

Our range for the week: R18.45/USD – R18.85/USD.

  1. Hopper, E. (2020). What Is the Recency Effect in Psychology? [online] ThoughtCo.
    Available at: https://www.thoughtco.com/recency-effect-4691883.

Have a great week ahead.