January 22, 2024
MyCURRENCY News | Week 4 2024
What we know
Last week was rather painful as we watched the USDZAR float away like a helium balloon at a toddler’s birthday party. We will let you decide who in this analogy is the toddler left staring up at the sky with tears streaming down their face. We moved some 2.5% weaker by midweek up to R19.16/USD and closed out the week ‘only’ 2% weaker at R19.05/USD. Sadly, the correction lower ran out of steam as this morning it looks as though USD bulls have taken hold and are pushing the USDZAR back up to R19.20/USD.
We feel this week may be more of a ‘wait and see week’, as market moving events only come into play from Wednesday onwards. We have our own inflation data out on Wednesday afternoon, and then on Thursday we have the SARB’s interest rate decision, though no deviation from our current 8.25% repo rate is expected. Shortly thereafter we have the EU’s own interest rate decision. Normally, high risk events in close proximity to each other would act similarly to a catalyst, leading to extremely jumpy trading. However, given expectations around the news events, surprises either way are unlikely, thus it may just be another day in the markets for us.
What others say
Visual Capitalist – Top 10 Retirement Planning Mistakes
“According to professionals, the most common retirement planning mistakes are time-related, like outliving savings or not understanding how inflation can affect a portfolio over time.
The number one mistake? According to 49% of financial planners, it’s underestimating the sizable impact inflation has on the value of retirement savings.”
Business Live – SA bucks global trend of privatising power structures
“Worldwide experience has revealed that a government-owned vertical monopoly in the generation, transmission, distribution and sale of electricity is the most inefficient arrangement for attaining the lowest-cost and most reliable delivery to consumers.”
Daily Maverick – After the bell: Davos, Day 5 — calming down to an Abnormal Normal
“The final session at Davos is always on the same topic, “The Global Economic Outlook”, and it always includes a selection of some of the top names and most important participants.
Last year, the catchphrases of the conference were “fragmentation” and “polycrisis” — both wonderful contributions to the lexicon of buzzword bingo.”
What we think
Last week we said that “Data events are slowly creeping back into the mix as the world returns to work which will make markets more lively – and this week sees some keys economic data out of China along with the EU’s inflation data on Wednesday.”
EU inflation printed in line with expectations last week, but the damage had already been done to the ZAR following poor data out of China on Tuesday morning. Economic growth forecasts were missed for the last quarter and demand looks set to be weak going forward under current circumstances. The trickle down here for SA is of course therefore weaker demand for our raw materials as well as overall contagion of risk assets (read third world countries) as China seems to stumble.
Expect the unexpected is our mindset for the time being, the ZAR seems ready to continue its trajectory upwards, though what the potential trigger for this may be is yet to be unveiled. It seems doubtful we are going to have any revelations in SA that would suddenly send the Rand on an immense positive rally, all we can hope for is that the ZAR clings to hope and keeps its feet planted firmly on the ground instead of taking off into the sunset.
Our range for the week: R19.00/USD – R19.35/USD.
Have a great week ahead.