Rand remains strong, but expect an increase in political risks in the coming weeks.

The Rand opened at 12.91 against the USD last week after trading as low as 12.84 – a month and a half low. The US Federal Reserve was playing down rate hikes on Tuesday which led to a weaker USD. There was room for ZAR strength as the weaker USD coincided with SA’s latest growth figures which came in at 2.5%, technically taking the country out of a recession. Food for thought is that agriculture was one of the biggest contributors to the stronger figures.

Following the GDP figures on Wednesday, ZAR strengthened to as low as 12.75 to the USD, finally closing at 12.80. The USD weakened to its lowest in more than two years against the Euro as it pushed through 1.20 as traders expect tapering as soon as October, meaning a slowdown in the quantitative easing program and potential rate increases.

News being neither here nor there and a favourable risk environment saw the ZAR appreciate to 12.74 against the Dollar, before weakening again. The Rand closed the week at 12.92 against USD, 15.51 against the Euro and at 17.00 against the Pound Sterling.

The Dollar staged a slight comeback on Monday as local political risk seemed to pop its ugly head again; as a result, ZAR pushed closer to 13.00 and ended at 12.96 against the USD.

In early Tuesday trade, the ZAR strengthened slightly as SA’s High Court overturned the election in 2015 of ANC leaders that are strong allies to President Zuma. The members want Zuma to be succeeded by his ex-wife, Nkosazana Dlamini-Zuma.

Data to look out for is SA business confidence tomorrow and current account figures on Thursday. Globally, we have the Bank of England policy decision as well as US inflation data on Thursday.

Have a great week, let's go to work.

Nothing good can come from nuclear missiles.

EUR/USD finally breached the 1.20 level last week as the Dollar weakened. ZAR opened on Wednesday morning at 12.97 with EUR/ZAR and GBP/ZAR trading at 15.55 and 16.77 respectively. Wednesday’s local budget figures were poor as expected; we are anticipating to come in way over budget and one can be sure that the ratings agencies are noticing.

With not much news effecting the Rand on Thursday, the market opened on Friday at 13.00 against the USD. The Rand is still benefiting from a weaker USD as global data seems to be improving; manufacturing PMI figures are picking up along with spending and income – all of which benefits the ZAR and other riskier currencies.

The Bloomberg expectation was that the US created 180,000 non-farm jobs in August. The official figure came in below expectations at 156,000. However despite a slight USD weakening, the market was mostly unmoved.

We had a quiet day on Monday as the US markets were closed for Labour Day, however “safe haven” currencies and assets benefited from North Korea’s latest nuclear missile test. Gold has seen its largest increase since April 2015. The strengthening gold price kept the Rand from weakening as much as other emerging market currencies as it closed Monday at 12.98 after opening at 12.92.

Big news today is that the Rand has “exited” the recession as South Africa's gross domestic product rebounded with 2.5% growth for the second quarter of the year, compared to the contractions for the previous two quarters. The Rand has strengthened on the back of this news and is currently trading at 12.93 to the USD.

It is a quieter news week but we expect the ZAR to be volatile given the North Korean situation and local politics. Look out for ECB rate decision and US jobless claims later this week.

Have a great week, let's go to work.

The Dollar’s loss is the Rand’s gain.

SA latest inflation figures released last week Wednesday revealed that inflation dropped to 4.6% for July, opening the door for another rate cut from the Reserve Bank this year. The Rand opened on Wednesday at 13.23 to the USD before weakening to 13.28 and finally closing the day at 13.16.

As we moved into Thursday evening, the Rand benefited from ludicrous claims by President Trump that he would shut down the government if he does not get funding to build the wall. In fact, all higher risk currencies strengthened against the USD as fears increased that US treasury yields could drop.

Following the Jackson Hole Symposium, ZAR strengthened along with other currencies against the USD. EURUSD pushed closer to the psychological 1.20 mark as both Yellen and Draghi were dovish and Draghi especially did not talk down the Euro strength.

The JSE closed at an all-time high on Friday with a 12% gain in SA’s stocks. This is less than the 26% advance by SA’s emerging market peers, as foreign investors have sold a net 65 billion Rand and thus showing a clear concern in the country’s direction.

The market had a quiet trading day on Monday as the UK celebrated their last bank holiday before Christmas. The Rand opened the week at 13.02; very close to the key level of 13.00. EURZAR and GBPZAR was at 15.54 and 16.80 respectively

On Tuesday, the Rand opened at 13.08 as North Korea tested a missile that flew over Japan, proving they can hit the American base in Guam. The market however seems more focused on the EURUSD cross that is getting closer and closer to 1.20.

In terms of data, we can expect a busier and thus more volatile week; SA budget and trade data are out on Wed and Thurs. Also Euro unemployment data on Thursday, followed by US non-farm payrolls on Friday.

Have a great week, let's go to work.

Rand stands strong in quieter week.

Global news and risk has been relatively quiet over the last week with economic data proving to have little effect. Last week’s Moody’s report showed, as was expected, that SA’s low growth remains a concern. Our debt to GDP ratio is also spiralling out of control as many SOE’s keep borrowing funds to stay alive. ZAR opened on both Tuesday and Wednesday at 13.31 against the USD.

News from the US is that President Trump has halted the business councils and links between corporate America and the Oval Office. This, along with the Fed’s outlook that they are in no rush to hike interest rates, helped the USD to weaken slightly as the ZAR opened at 13.17 on Thursday morning.

Rand gains were reversed on Friday morning after the horrific terrorist attack in Las Ramblas, Barcelona. The Rand opened at 13.26 against the USD and 15.55 and 17.09 against EUR and GBP respectively after the attack as it created nervousness in the markets. ECB minutes showed that members are slightly worried that the Euro is strengthening too much against the USD

At the start of the week there were few local and global events providing direction, so we turn our attention to the Jackson Hole symposium which starts on Thursday evening and will include speeches by both Yellen and Draghi.

The Rand opened this week at 13.18 against the USD and we expect it to trade range bound due to lack of significant economic data. Local CPI figures are out on Wednesday.

Currently, the Rand is trading around 13.22 against the USD.

Have a great week, let's go to work.

After the riot, peace and quiet

On the 8th day of the 8th month, Jacob Zuma survived a no-confidence vote for the 8th time. The Rand flirted with the idea that the vote could go against Zuma, although it was not expected. In the lead up to the secret parliamentary vote, the ZAR strengthened to as low as 13.15, before immediately weakening by over 1% as the results were released.

The Rand went from the best performing currency on Monday to the worst performing emerging market currency on Tuesday. ZAR opened on Tuesday morning at 13.21 against the USD, and 15.61 and 17.24 against EUR and GBP respectively – by close, the currency was trading at 13.44 against the USD, after going as high as 13.54 and at 15.77 and 17.46 against EUR and GBP.

Adding to the weakness were comments from Donald Trump warning that North Korea will be met with fire and fury, amongst other things. The measuring contest between the two leaders set off risk aversion in global markets causing emerging markets to weaken. The Rand closed Friday at 13.41 against the USD, as local markets focused on the Moody’s rating review which would happen later Friday evening.

At the 11th hour, Moody's decided to postpone their rating decision, which resulted in a placid market. The Rand strengthened through the day as no news equalled good news, closing at 13.31 against the USD on Monday.

We are expecting a quieter week with no major events on the global scale and the US-North Korea standoff (hopefully) fading away. On the local front, Moody’s is expected to release an economic update later today. Also look out for SA retail sales figures for June this week along with UK inflation, and the ECB minutes towards the end of the week.

Have a great week, let's go to work.

A weak week.

Not the best week for the Rand as it traded in a range of over 2%, strengthening to 12.86 against the USD last week before depreciating to the 13.20 where it is currently sitting.

Last Wednesday, the ZAR opened at 13.07 against the USD as the US Fed kept interest rates as expected, unchanged – poor inflation data could be a primary reason. As a result the USD weakened; EURUSD traded as high as 1.177. ZAR also strengthened, opening on Thursday morning at 12.86 against the USD.

With little local data being released towards the business end of last week, the ZAR reacted to Dollar movements; the USD gained back some of its losses on Thurs afternoon and the Rand opened on Friday at 13.00. With Friday being a quiet day on the news front, trade was thin and the trading range narrow.

This week being an end of the month week, we can expect a volatile currency as data is released. The Rand opened the week at 12.99 against the USD before weakening aggressively against all currencies as credit rating fears returned. Moody’s pointed out that growth remains a concern – not good news considering they are scheduled to decide on SA’s credit rating in 10 days' time.

While the Moody's report is reason to be worried, SA posted a trade surplus in June, causing the second quarter surplus to rise to the largest in six years. Foreigners have been net buyers of SA bonds over the last 2 and a half weeks as emerging markets benefited from carry trades.

If you're in SA, you are probably more focused on the fuel price increase tomorrow, but also keep an eye out on the Aussie rate decision, US home sales and Eurozone GDP. Then on Friday it is the big one - US non-farm payrolls.

Have a great week, let's go to work.

Steady as she goes.

The Rand broke through support levels at the start of last week, strengthening to 12.885 vs. the USD as the Dollar sank after President Trump’s healthcare bill failed to drum up enough support. The USD weakened to its worst levels since May 2016 against the Euro, as it broke through 1.15. The Rand was slightly stronger against the GBP and Euro due to the delaying of the proposed mining charter.

On Wednesday afternoon, the ZAR closed at 12.91 against the USD and at 14.86 and 16.82 against EUR and GBP respectively as the inflation figures came in at 5.1% for the month of June – on target and what the market expected.

Politics and threats aside, SARB managed to keep its focus on policy, cutting the interest rate by 25 basis points to 6.75% per year. The rate came as a slight surprise, although it was hoped for and the Rand weakened through the resistance level of 13 to close Thursday afternoon at 13.02 vs. the USD. The decision was not unanimous and it was the first cut in five years, however growth expectations remain bleak for The Republic.

As the ECB kept interest rates unchanged last week, the shift in focus was to the other side of the pond, where the US Fed is also expected to keep interest rates unchanged later this week. The Rand is back around 13s, opening the week at 12.90 against the Dollar. The unchanged Euro (and possibly US) rate can be seen as a Rand positive in that investors will still receive a much better return in SA.

Today we see SA’s second quarter unemployment rate released – the previous figure came in at 27.7% and you would be surprised to see an improvement on this figure. This week we also see global PMI figures released as well as UK and USD GDP. Locally, we also have the budget balance later in the week.

Have a great week, let's go to work.

If one goes up, the other must come down.

A week ago we saw quieter trade as the US was closed for business, celebrating Independence Day on Tuesday. The same day, the Rand opened at 13.20, slightly down from the previous day’s highs of 13.27 as risks (especially locally) remain high, but global factors seemed to be improving.

Through Wednesday, as the ANC conference reached its final day, the ZAR weakened and almost touched 13.50 – eventually closing at 13.38 after the proposal to nationalise the SARB sent the market into panic mode. Overall though, the conference could be seen as positive and a step in the right direction.

While it could be argued that the Rand overreacted to the suggestion of the SARB being nationalised, the currency failed to reverse the losses as it opened on Friday at 13.44 against the USD. A deteriorating global environment and rise in global yields resulted in emerging markets suffering losses, as investors opted for safer havens and focused on the non-farm payroll figures that were to be released on Friday.

The payroll data was positive – the US added 220,000 jobs in June, which pushed US Treasury yields up and placed further strain on emerging markets and the Rand.

The ZAR opened this morning 13.44 against the USD and at 15.30 and 17.30 against the EUR and GBP respectively. The Public Protector’s decision to back down on the SARB mandate issue is more an embarrassment than anything else; it had very little effect on the Rand. Commodities are slightly down and emerging markets are again being sold off as the USD keeps surging; the Rand is currently trading close to 13.60 against the USD.

Keep an eye out for SA manufacturing data today and mining data on Thursday. Today, the Bank of England’s deputy governor, Ben Broadbent’s speech might give direction to the market and investors. In line with that, look out for Janet Yellen’s testimony to Congress on Wednesday, followed by US inflation data and consumer confidence on Friday.

Have a great week, let's go to work.

Making a move.

The Rand and the rest of the emerging market currencies were stung last week when Mario Draghi commented that the EU Central Bank may start tapering its quantitative easing program. In other words, the Bank will start reducing its bond and money printing activities. As a result interest rates usually rise, meaning the EUR strengthened and other currencies such as the Rand weakened. EURZAR opened on Tuesday at 14.37 and moved all the way to 14.77 through the day before the Rand strengthened slightly.

The ZAR recouped its losses in part; closing on Wednesday at 14.70 against the EUR, 12.88 against USD and at 16.70 against the GBP after the ECB commented that Draghi’s comments were “over interpreted” – much to the confusion of the market.

The Rand has been flirting with some key technical levels; once the currency breaks through resistance and these levels get hit, the chances increase for the ZAR to gravitate to the next level. With the confusion and uncertainty created by the ECB’s comments, investors have pulled funds from riskier assets such as the ZAR.

USDZAR opened the week at 13.06 having broken through both resistance levels of 13 and 13.05. EURZAR pushed straight through resistance at 14.45, opening the week at 14.90 – just short of the psychological 15 mark. GBPZAR has pushed over 17.00 having opened the week at 16.97's.

A rise in global yields has changed the Rand from flavour of the month to just another risky currency and we can expect more losses as investors opt for other options – very evident as the ZAR pushed through 13.20 against the Dollar. Locally, event risk remains fairly high this week, given the ANC policy conference.

Today is a bank holiday in the US so we expect the Rand to remain fairly stable. It is currently trading at 13.22 against the USD, 14.99 against the EUR and 17.08 against the GBP. The ANC conference finishes tomorrow but keep an eye out for Fed and ECB minutes tomorrow and the US non-farm payrolls on Friday.

Have a great week, make it happen.

Enjoy the silence.

After being slightly rattled by the Public Protector's comments last week, a six month low oil price ($ 46 per barrel) and strengthening USD added to pressure on the Rand. A lower oil price, while good for importers like SA, also means nervous markets and investors and, in turn, higher risk currencies like the ZAR weaken.

On Wednesday last week the ZAR opened at 13.11 against the USD with resistance at 13.15. SA inflation for May came in slightly higher than in April (5.4% v 5.3%), however it still seems on a downward trend which makes an interest rate cut possible later this year.

The Rand took the Constitutional Court's secret ballot ruling as a positive, and along with easing global pressures, caused the ZAR to drop back below 13 as the market opened on Friday. A weakening USD meant there was room for the ZAR to strengthen as it closed the week at 14.45 and 16.48 against the EUR and the GBP.

With the northern hemisphere enjoying the summer holidays, the market is noticeably quieter and we can expect the Rand to remain range bound. This morning it opened at 12.85 against the USD and did not weaken as expected after Deputy Finance Minister Buthelezi questioned whether the SARB and its mandate is right for South Africa.

Like a broken record, it is the same old story – there is room for ZAR strength, but politics mean the currency remains on a knife's edge. In the meantime, South Africa's mining companies have applied to the High Court in Pretoria to block the government's new Mining Charter – we wait and see.

Janet Yellen is due to speak tonight and we can also look forward to SA PPI on Friday and Euro inflation on Wednesday – all in all, a quiet week.

Have a great week, make it happen.

Halting a strengthening ZAR: Lesson one.

Markets were range bound going into Wednesday afternoon as attention focused to the US Federal Reserve for the rate decision. As expected, the Fed hiked the US rate by 25 basis points and suggested there might be another hike later this year. Weak US inflation figures, however, caused the market to doubt whether we will see another hike.

The USD weakened after the weak inflation data with emerging markets such as the Rand being the key winners. The ZAR opened Thursday at 12.63 against USD after touching 12.56 overnight – the lowest since Minister Pravin Gordhan was removed in a cabinet reshuffle. It is important to note that much of this strength is due to USD weakness – EURZAR, as an example, still needs to break below 14.10.

The higher interest rate and in turn, stronger USD caused the ZAR to open the week slightly higher at 12.80. However the new mining charter certainly played a role as well and we saw the ZAR lose 2%. Mining stocks responded by dumping up to 10% after the release. The Rand also lost ground against EUR and GBP; opening the week at 14.33 and 16.33.

Comments from Public Protector, Adv. Busisiwe Mkhwebane resulted in the Rand weakening even further yesterday, as it lost as much as 1.9% as she suggested the constitution should be changed to amend the primary objective of the SARB. The ZAR pushed through 13.00 against the USD, where it is currently still trading.

Not a great deal of data to look out for this week; tomorrow we see SA's inflation figures and US home sales released, followed by Euro consumer confidence on Thursday.

Have a great week, make it happen.

Failure to launch.

After a day of much anticipated data, "Super Thursday" failed to live up to expectations. The ECB did not surprise and comments were seen as "dovish", meaning that any rate adjustments are probably priced into the market already.
Comey's testimony in the US was a fairly placid affair, and unfortunately there were no upsets and the impeachment of President Trump has been ruled out. Again, the UK had a shock election result and is now faced with a hung parliament which caused the Sterling to stumble.

The Rand opened nervously at 12.82 last Wednesday, where a wide trading range was expected. It recovered some of the losses from the previous day, after first quarter GDP figures showed that the economy contracted by 0.7%, officially pushing SA into recession.

Risks were high going into Thursday, however the Rand was relatively stable, as global events never really packed the punch the market expected. The ZAR closed Thursday evening at 12.90 against the USD after pushing higher due to weak local manufacturing data.

Late on Friday, Moody's released their decision to downgrade SA's credit rating, leaving us one grade above junk status with a negative outlook. The Rand slid to 12.95 against the USD, before recovering and opening the start of the week at 12.89, with event risk low for Monday and Tuesday. The Rand has recovered from setbacks very well and we can expect the ZAR to push stronger.

Trade will more than likely be fairly quiet and range bound before the US Fed interest rate decision tomorrow, where a rate hike is expected. US inflation figures for May will also be released on Wednesday with Friday being a public holiday in the Republic (Youth Day).

Have a great week, make it happen.

Expecting volatility.

A favourable global risk environment and USD weakness saw the Rand burst through key levels over the past week. USDZAR opened last Wednesday at 13.10 and appreciated to a low of 12.79 last week and even stronger this week.

The Rand, as expected, reversed the politically linked gains of the previous week as it became clear there would be no immediate change in SA's political landscape. Given the weakness, the Rand was an underperformer at the start of the week.
The ZAR was spared further losses, along with other emerging market currencies due to sharp USD losses – EURUSD traded above 1.1250. Fitch and S&P kept SA's ratings unchanged last week.

Reduced global risk saw the Rand strengthen at the start of this week as the Rand opened the week at 12.85 against the USD after Friday's weak US non-farm payrolls pushed the USD down.

We are expecting the ZAR to remain range bound until Thursday when 3 major events are likely to cause nervousness and in turn, volatility. We have the UK election where the Tories seem to have lost some of the massive gains which they have had over the Labour Party. Then, ex FBI Director James Comey is set to testify in the Senate which, in theory could bring down team Trump. Lastly, we have the ECB meeting.

Today, SA's GDP figures for Q1 of 2017 were released - gross domestic product contracted 0.7%, indicating that we are officially in a recession as it follows the previous decline of 0.3%. Given the current political and economic climate, the investors and the World Bank believe growth will remain low for the following two years.

Other events to look out for is the Moody's rating review of SA on Friday.

Have a great week, make it happen.

Buy the rumour, sell the fact.

Last week saw a textbook example of the phrase "buy the rumour, sell the fact", as the Rand appreciated on rumours that Jacob Zuma would be reprimanded at the ANC NEC meeting, which started on Friday.

After opening last week Tuesday at 13.30 against the USD, the ZAR traded to a 4 week low of 13.01 as rumours of the removal of the president started doing the rounds. The hope carried forward to Wednesday as the ZAR closed the day's trade @ 12.88, after opening at 13.10.
Also out on Wednesday was the latest CPI report, which showed good news for consumers in that inflation was down to 5.3% in April 2017 from 6.1% in March 2017. This is the lowest rate since December 2015.

Contrary to popular belief, lower inflation is not always a Rand positive as it could be seen as a reason for the Reserve Bank to lower interest rates. Lower interest rates in turn could reduce the amount of foreign investments into SA, or demand for ZAR and therefore put pressure on the local currency.

The ZAR followed global factors as it awaited news from the ANC meeting over the weekend and the SA Reserve Bank kept interest rates unchanged. One could argue that had it not been for political risk, we would have seen a rate cut, but in all honesty – what is the point.

Global factors were at a minimum, given the G7 meeting and the media's focus on Trump's handshakes.

The ZAR opened the week at 12.85 against the USD as President Zuma survived and the market seemed unsure of exactly what that means – is he stronger or weaker than before? With Monday being a US and UK bank holiday, trade remained thin during the day. On Tuesday we saw some of the Rand "hope strength" diminish as the currency started unwinding its profits.

The Rand is still seeking direction after the weekend, but we can expect it to start unwinding the 2 – 3% gained last week.

Look out for US personal income and Eurozone inflation tomorrow, followed by President Zuma in Parliament on Wed and Thursday. On Friday, the big one – US non-farm payrolls for May.

Make it happen.

What goes up must come down.

The USD weakened sharply at the start of last week following weak inflation data. Riskier assets were further outshone by the Wall Street highs and growth in global confidence. Commodity prices surged as weak data from China was offset by plans of infrastructure development. As a result, the Rand strengthened slightly at the start of the week, even outperforming other emerging market currencies and hitting its best level since the firing of Pravin.

Global markets suffered their worst overnight losses on Wednesday as investors feared that the Trump administration will avoid the anticipated stimulus. Wall Street lost up to 1.8% as the Rand also weakened – up to 13.40 against USD from a low of 13.04 the previous day. EURZAR and GBPZAR opened at 14.80 and 17.20 respectively on Thursday and closed the day even weaker.

To add to the weakness, news from Brazil showed that the stock market lost over 10%, the currency also lost over 7% in response to corruption investigations involving the president. Emerging markets followed suit and the ZAR depreciated by 2%, reaching a high of 13.55 against the Dollar by mid-day.

The weekend brought some much needed optimism as markets as well as the Rand recovered somewhat in late Friday and early Monday trade. The ZAR opened the week at 13.22 against the USD, 14.78 against EUR and GBPZAR was at 17.17.

Markets responded nervously to the horrible news of a bomb blast in the UK and the USD continues to weaken as global news seems to remain Rand-positive going into Tuesday.

Look out for Trump's budget details later today as well as US Fed minutes on Wednesday. We also see SA inflation data on Wednesday. The price of oil climbed slightly ahead of an OPEC meeting on Thursday. Finally on Friday we see an ANC NEC meeting.

Have a great week.

All over the show.

The ZAR traded in a close range last week Tuesday at around 13.30, 14.56 and 17.20 against the USD, EUR and GBP respectively. While Euro manufacturing data improved slightly, the data for the US and China showed that manufacturing slowed down a little. Ranges were tight and trade was low due to the mixed bag of results.

Locally, new car sales fell 11.3% year on year and manufacturing data was down as well for the first quarter of 2017.

The US Federal Reserve left interest rates unchanged, which increased the odds for a June hike – the USD rallied as a result and saw the Greenback move to 13.44 versus the ZAR. The stronger Dollar and possible Trump tax cuts saw an emerging market sell-off. The Rand was on the receiving end, bursting through resistance levels and weakening to 13.67– the weakest since the infamous cabinet reshuffle.

France voted in a new president in Macron, resulting in a stronger Euro and revived optimism as the emerging markets made a comeback – the ZAR strengthened to 13.46 versus the USD as markets took on risk again.

The reduced risk in global markets, however, saw commodity prices take a hammering as the Rand reversed the gains and weakened to 13.60 on Wednesday.

We expect the Rand to remain range bound this week, but keep an eye out for Chinese inflation data today, followed by SA mining and manufacturing as well as UK manufacturing and interest rates tomorrow. Then on Friday, US inflation and retail figures as well as German 1Q GDP.

In other news, the Springboks have been pooled with the All Blacks in the group stages for Japan 2019

Enjoy the week.

Out of the ashes, the Rand will rise.

Trade was thin last week, given a shorter week, but the Rand continues to do remarkably well – it was fairly stable and trading in small ranges. While the political storm is always looming on the horizon, we have not seen any further shocks following the cabinet reshuffle.

As a result, the Rand reacted more to global news where risk aversion eased, opening an opportunity for the ZAR to strengthen. Inflation data released last week Thursday was positive – CPI inflation dropped from 6.3% to 6.1% y/y as food prices climbed at the slowest rate in 13 months. This is positive news – especially for those hoping for a rate cut at some point. After opening at 13.28 against the USD on Thursday, the ZAR appreciated to 13.12 and closing at 13.15.

It could be argued that the Rand strength was due to volatile USD and Euro, where the Euro was under pressure going into the French elections. Nonetheless, we have seen some good capital inflows into SA; almost R 2bn on Thursday.

The French election went as expected and global markets showed their appreciation, by appreciating (!) – There was always a chance of an upset (think Trump, Brexit) and markets rallied following the result. The Rand dipped below 13, before closing and settling at 13.00 v USD; 14.12 against the EUR and 16.65 against GBP yesterday.

Again we turn to the US and USD, which could be volatile this week as they have to agree to and pass a budget by Friday, or face a government shutdown. Also look out for the ECB statement on Thursday and US GDP and local data on Friday, with Thursday a public holiday in the Republic.

All the best, enjoy the shorter week.

All Quiet on the Western Front

A fairly slow week, given the Easter holidays. Nonetheless, the Rand strengthened last week Thursday – helped mostly by comments from US President Trump. The ZAR gained as much as 40 cents on Wednesday, strengthening by 2.7% to close at 13.42.
President Trump commented that he prefers low interest rates and that the USD gained too much, too fast and that it is currently too strong – this caused the Dollar to weaken and emerging markets to strengthen. EM markets were further helped along by good Chinese trade data.

The Rand has now gained over 50 cents; or a third of its losses following the cabinet reshuffle. Trade on Monday was very light, however further Dollar weakness helped the Rand strengthen to 13.27. One cannot help but wonder where the ZAR would have been trading, had there not been a cabinet reshuffle...

While there are all sorts of comments from political leaders, both good and bad, there has been little news, and as such less risk. The Rand and other emerging markets are currently more affected by global issues such as the French elections where it is a neck and neck race.
British PM Theresa May's call on a snap election has helped the GBP strengthen, but it adds to global uncertainty.

With another shorter week, we expect the Rand to remain range bound - with global uncertainty and risk aversion, we can expect pressure to remain on emerging markets. Keep an eye out for both local and Euro inflation data today.

All the best, enjoy the shorter week.

It's all junk.

What a reality check we have had over the last week. To put it bluntly, we are all 13% poorer than at the start of last week.

Unbelievable.

Only last week did we mention how well the ZAR has been doing – down to 12.30 at the start of the week. And only last week did we mention that SA is always on a knife's edge.

After Pravin Gordhan was recalled from an investor road show in London, speculation of a cabinet reshuffle gained momentum. Then on Thursday, in the middle of the night, President Zuma appointed new members to cabinet – the speculation could end and Pravin finally knew his fate. In the immediate aftermath following his firing, the ZAR weakened from 12.80s vs USD earlier in the day, to 13.60. EURZAR traded at 14.50 and GBPZAR at 16.94.

The market hates uncertainty and SA's future suddenly seemed very muddy.

While we are all changing our Facebook profile photos in rage, the repercussions seem to be growing - on Monday evening S&P downgraded SA's credit rating to junk status. Again, the Rand responded by weakening, opening today at 13.75 v USD, 14.65 against EURZAR and GBPZAR at 17.15 ... and still weakening at the time of writing.

So far we have not seen massive investment flows out of SA which would add to our current woes. Moody's did caution that the country's credit rating is due a review for downgrade – when 2 out of the big 3 ratings agencies view our credit as "junk", we might just see those outflows.

Again we find it hard to focus on what lies ahead in the week when there is so much to digest right now. However, look out for FED and ECB meeting minutes tomorrow and on Thursday, as well as a busy Friday with Moody's rating review and US non-farm payrolls.

All the best, have a good week.

The game is roulette, and the wager is the South African economy.

The Rand started last week positively, rather it continued its strong trend: 20 month highs were hit mid-week as the ZAR benefited from a narrow current account deficit and lower inflation. The Rand strengthened to 12.52 against the USD, 13.42 against the Euro and 15.45 against Pound Sterling as SA Reserve Bank data showed that the current account deficit narrowed to 1.7% of GDP in 4th quarter, from 3.8% in the 3rd quarter while headline inflation for February was down to 6.3% y/y from 6.6% in January.

Whilst it could be argued that the Rand gains were over extended and a reversal was possible, the big question mark hung over the US healthcare reform. While it was expected that Trump's health bill would pass the House Republicans, the opposite was true. The market responded fairly negatively; it feared that Trumpflation trades were overdone however it had little impact on risky assets and the Rand kept strengthening.

Sadly, all the gains and work the ZAR has put in is unravelling – it has already lost over 5% since yesterday's high. The reason why Minister Gordhan and Deputy Minister Jonas were asked to return to South Africa from an investor road show remains unclear – and herein lies the problem, the uncertainty.

At this stage we can only guess why PG has been asked to return - there is speculation that Minister Gordhan will be replaced as Finance Minister so that the court case over Gupta-linked company bank accounts can be thrown out. Remember that Treasury is also the only force standing in the way of Zuma and a full state capture...

An item on the Bloomberg data feed this morning showed that President Zuma told senior leaders of the South African Communist Party that he plans to fire Finance Minister Pravin Gordhan. Following this news, the Rand weakened as much as 3% to over 13 against the USD.

South Africa. Always on a knife's edge.

While it is hard to focus on other news; keep an eye on out the UK triggering article 50 tomorrow followed by the SA Reserve Bank rate decision on Thursday as well as Euro inflation and US income & spending.

Have a great week and let us all hope that sanity prevails.

From Trump's lips to tulips – it is all happening in the US and Holland this week.

Market confidence was boosted by Chinese trade statistics last week, which showed a jump in imports. Strong USD data however, has started to apply pressure on the Rand and other emerging markets. The Rand pushed through 13.15 on Wednesday, touching 13.19. It is a near certainty that the Fed will increase rates this week, adding to the Dollar strength.

Friday morning, trade opened with the Rand slightly stronger after spiking in Asian trade to 13.37 and 16.27 against the USD and GBP respectively. With the EUR also slightly weaker, EURZAR was trading at 14.10 as it awaited the US non-farm payrolls.

Strong US payrolls caused the Rand to have a slight wobble, however it was standing firm against most currencies – especially given that a US rate hike is almost completely priced into the Dollar. On Monday, the ZAR opened at 13.15 and 16.00 against the USD and GBP and at 14.05 against a strengthening Euro. All markets have their eyes firmly set on Wednesday as the Dutch head to the polls in an increasingly volatile political situation and the US Fed meets to discuss the interest rate.

Chinese data released early on Tuesday showed their economy is growing at the beginning of 2017. This eased some pressure caused by rumours of another Scottish referendum, while a parliamentary vote has cleared the path for British PM Theresa May to trigger Article 50, sending the Pound tumbling. Adding to global risk is an intensifying political situation between the Netherlands and Turkey.

There is lots to look out for this week, so expect trade to remain volatile. Tomorrow we have the double whammy of US inflation and the Fed rate decision as well as Dutch elections. Also BoJ and BoE policy decisions on Thursday, along with Trump's budget and the UK triggering Brexit – both which are expected to happen this week.

Have a great week.

No news is good news.

US President Trump's speech offered little; he mentioned additional defence budget as well as an infrastructure spend, but there was actually very little fiscal content. For the first time he spoke "presidential", but markets moved as little as his speech. On Wednesday EURZAR and GBPZAR opened at 13.88 and 16.27 respectively, while USDZAR opened below 13 and slowly weakened to 13.10 through the day.

Hawkish comments from Fed officials resulted in the probability of a rate hike in March to jump to 80% from 60%. As a result, the Dollar strengthened, helped along by a recovering US labour market, as jobless claims reached their lowest since March 1973. Emerging market currencies, including the Rand, weakened as the ZAR pushed through the short term resistance level of 13.15.

The Rand recovered slightly as it opened this week at 13.05 and is expected to trade in a wide range.

Welfare payments and politics aside, there is very little influencing or to get excited about in the local markets – not really a bad thing as this also means political meddling have disappeared for time being. The ZAR opened at 15.91 against GBP on Tuesday – the first time since 31 October 2013.

Fourth quarter GDP figures came in at a contraction of 0.3% and a year on year growth of 0.7%; worse than the expected growth 0.4%. Worryingly, mining and manufacturing fell by 11.5% and 3.1% respectively.

Despite the poor growth figures, the Rand remains relatively strong, supported by positive Chinese trade data as it remains below 13 versus the USD today. Currently the Rand is trading below 13 to the USD, below 15.85 against GBP and below 13.70 against the Euro – quite remarkable.

Look out for UK budget today, Eurozone GDP and the ECB rate decision (Thursday) and then on Friday another big one; US unemployment rate and non-farm payrolls

Have a great week.

Not the busiest of weeks, but the Rand remains strong.

After a satisfactory, yet somewhat controversial budget, the Rand showed appreciation before weakening towards the end of Wednesday last week due to global related issues. French political risk has declined, stabilising the market to a degree and the USD lost some major gains after the Fed commented they are worried about to strong a Dollar. USDZAR closed at 13.00 on Wednesday – could the strong Rand be a suggestion that the market believes SA has avoided a downgrade later this year?

Emerging markets strengthened on Thursday with the ZAR leading the pack. Reduced political risk in France and weaker USD ignited a rally for the higher risk currencies. The Rand dipped below 12.80 setting its sights on a new target of 12.60, even 12.54. However speculation of a growing storm in local politics pushed the Rand weaker.

The ZAR opened the week at 12.96, somewhat higher than the low of 12.785 as it was reported that the deputy finance minister is being investigated by the Hawks. Pushing aside local politics, we cast our focus to the north as there could be a pause in the Trump trade as President Trump will address Congress later today. What the market will be looking for is a detailed speech outlining economic and tax policies – and not the usual empty promises and distractions.

There is not much happening in the local market and the ZAR is expected to remain range bound until the USD gives it some direction later today.

In addition to Trump's speech, Fed policymakers will also speak today, followed by US GDP and consumer confidence on Wednesday. Also look out for Canada's central bank rate tomorrow and Janet Yellen's speech on Friday.

Have a great week.

Clash of the heavy weights on Wednesday's budget speech.

The Rand finally broke through the psychological barrier of 13.20 against the USD on Tuesday last week after positive employment figures were released, closing the day at 13.08. Wednesday saw the currency continue to strengthen for a sixth day in a row - the longest winning streak since September 2016 – the ZAR gained as much as 1%, dipping below 13.00 against the USD for the first time since August 2015.

In January, inflation in SA slowed for the first time in five months, adding fuel to the fire of the ZAR rally. The Trump trades have certainly helped too. Caution is advised at these levels as the Rand has certainly gained more and faster than other emerging market currencies – it is also worth remembering that while it can take weeks for the ZAR to strengthen, an unwind can happen in a few days…

The ZAR opened the week at 13.05 against the USD, 13.85 and 16.20 against EUR and GBP respectively in quiet trade due to a US public holiday. The big news over the weekend of course, was that disgraced ex Eskom CEO has been sworn into parliament. Does this pave the way for him to become the new Finance Minister? Time will tell, but one would assume this would not happen anytime soon, given the budget tomorrow?!

Internationally, the Euro is weakening after French polls indicated that Marie Le Pen and her far right party are gaining momentum in the presidential race.

Tomorrow (Wednesday) is a massively important day as Finance Minister Gordhan delivers his budget speech. In the one corner, we have Gordhan looking to keep state spending low and to keep off a junk credit rating and in the other corner is President Zuma, who has his own intentions – amongst them a nuclear power plant and "radical economic transformation"

Have a great week - from your non-colluding Foreign Exchange Brokerage.

The Rand – always on a knife's edge.

Again, President Trump is dominating news economically, politically and worldwide. Negative comments towards other countries' weak currency policies have not gone unnoticed – essentially the president wants other currencies stronger and the USD weaker to assist exports.

On the other side of the pond in Europe, GDP and inflation data pleasantly surprised the market, raising expectations that the ECB will have to increase interest rates at some point this year.

Locally, fears of a cabinet reshuffle are still doing the rounds as rumours of ex-Eskom CEO Brian Molefe replacing Finance Minister Gordhan continue as comments from President Zuma indicated that "Treasury is standing in the way of reform."

The week opened with USDZAR at a strong 13.26, while trading at 14.30 and 16.55 against EUR and GBP respectively after Friday's US non-farm payrolls suggested a strong economy. Faster than expected job growth and economic stability assisted higher yielding currencies such as the Rand as it had its best day in 3 weeks.

The ZAR has again touched the 13.20 level against USD, but still failed to break it.

In early trade on Tuesday, the ZAR lost 1% to 13.44 against the USD ahead of the State of the Nation address on Thursday as we see the market largely driven by political factors.

Along with the SONA on Thursday, keep an eye out on US trade data on Tuesday and US consumer confidence on Friday as well as SA mining and manufacturing data on Thursday.

Have a great week.

Hold. Hold. Hold the interest rate.

The Rand opened last week Thursday at 13.56 against USD after yo-yoing and then weakening slightly following Yellen's support of more US rate hikes. Locally, inflation figures came in at 6.8% - a ten month high, but only slightly higher than expected. This did not have much effect on the ZAR, as it continued to track the EUR and USD; swinging but directionless.

As one could expect, trade on Friday was thin, as the world, well at least in some parts, focussed on the inauguration of America's 45th president. Data from China showed that the Chinese economy is growing at 6.7% - the slowest rate in 25 years, but bang on market expectations. The Rand weakened slightly along with other emerging markets as the Turkish Lira sank, reducing the demand for riskier assets.

USDZAR closed the week at 13.55, with EURZAR and GBPZAR at 14.55 and 16.76 respectively.

With a quiet week, the main focus point was the interest rate decision yesterday. The SARB kept rates unchanged at 7% - in part due to slightly higher inflation. As the drought (and in theory inflation) eases, one could expect rate cuts later in the year.

The interest rate has been steady since March 2015 as the economy only expanded by 0.4% last year - the lowest since the 2009 recession. The Rand hit a 2 and a half month low at 13.29 against USD, before closing at 13.40 on Tuesday, below the psycological 13.41 mark.

This week, keep an eye out for German business climate and consumer confidence today and tomorrow, followed by UK GDP figures and then also US GDP figures on Friday. On Friday, President Trump will also meet Prime Minster Theresa May - will be very interesting to say the least.

Have a great week.

New Year, New Rand – are we looking at the strongest start to the year since 2008?

By last week Thursday the Rand was on track to having its best start to a year since 2008 as it rallied against the USD, strengthening by 1.4% to below 13.45. Many analysts and major banks are cautiously optimistic, saying that the Rand has room to strengthen this year, given the drought ending and economic improvements.

The Rand also reacted positively on speculation that the Turkish central bank will take steps to support the Lira, which has weakened over 9% this year.

On Monday, however, we were quickly reminded of the risks that come with the highly volatile ZAR which has been trading in a 60 cent range - the Emerging Market Index all but reversed the gains, sliding significantly as concern grow that threats to global trade and growth are increasing. The Rand reached 13.70.

While it was a public holiday in the US on Monday, we cannot ignore the USD and the Trump effect. Markets disliked his first speech as he focussed more on building a wall and taxing US imports than economic policies and we saw the Trump trades and USD strength starting to reverse. More recently though, Trump surprised everyone by indicating he wants a weaker Dollar - the US President is a law unto himself.

In other global news, we saw a very volatile GBP as Prime Minister Theresa May pressed for a hard EU exit. Sterling weakened aggressively before her speech on Tuesday, before gaining and having its second best trading day since 1998. Let's not get too excited though, GBP is still 16% or so worse against USD since pre Brexit.

The Rand opened at 13.46 against the USD on Wednesday, GBPZAR @ 16.63 and EURZAR @ 14.40 and is expected to remain range bound with no real important data to be released for the rest of the week.

Watch out for SA and Euro CPI today as well as Eurozone refinancing rate and US initial jobless claims on Thursday and then finally China Industrial production and retail sales on Friday.

Have a great week.

The December Effect – How will the ZAR end 2016

The Rand had an interesting time against major currencies on the whole last week.

On Wednesday morning ZAR was at USD/ZAR 13.66, EUR/ZAR 14.66 and GBP/ZAR 17.30's - the consensus was that the Rand had actually outperformed.

On Thursday morning the ZAR seemed to be marching on with the main ZAR currency pairs opening at USD/ZAR 13.47, EUR/ZAR 14.53 and GBP/ZAR 17.06.

On Friday morning we saw ZAR finally bounce and open at USD/ZAR 13.70, GBP/ZAR 17.21. This was due mainly to the ECB extending its bond buying programme and all eyes on the local Current Account data later in the day.

Monday morning did not get off to the best start in the world with the ZAR on the back foot again. USD/ZAR opened at 13.80, EUR/ZAR at 14.55 and GBP/ZAR at 17.40 – The larger Current Account Deficit for SA was negative, oil also played a hand in this with more countries linking with OPEC in cutting oil production. The markets have had another punt at the fact that Trump will be a positive to stimulus and therefore seeing the USD do rather well.

This week has seen some significant volatility in the markets and in particular the ZAR.

Today sees all eyes turning to the USA. We think it is a certainty (90%) that the FED will raise interest rates later today but most of this would have already been factored in. The real interest will be to see if there are any hints made by the FED as to what their projections will be for next year….. Will they look to hike 2 or 3 times in 2017? Any indications that the US will aim to propel rates higher in 2017 will benefit the US Dollar and could weigh on commodities and the SA Rand.

Locally we will be interested in our Inflation figures coming out later this morning – this could cause volatility if the figure is drastically off initial predictions. Could there be scope for SARB to cut rates next year? We can only hold thumbs!

Tomorrow we keep an eye on South Africa's PPI figures, Euro Manufacturing PMI, Bank of England Bank Rate and US Jobs data and Manufacturing PMI.

Friday is Reconciliation day in SA with Eurozone CPI stats also out

Have a great week.

Downgrade avoided – we live to fight another day!

Last week the Rand generally moved sideways as all events were dwarfed by Standard and Poor's credit rating decision released on Friday evening. Most economists were of the opinion that the country would survive a credit rating this time round, even with the country's low growth rate. As far as global news was concerned, the USD continued its positive run – consumer confidence rose after the election and house prices continued to increase.

Oil prices jumped as much as 10% as OPEC announced a cut in oil production by a larger than expected 1.2 million barrels per day. How long this agreement lasts will remain to be seen – for what it is worth, investors expect US inflation to rise, which could lead to higher interest rates and thus a stronger USD. A December Fed rate hike is now fully priced in.

The Rand opened on Wednesday at 13.90 against USD, before weakening. ZAR however kept in range and started Friday's trading at 14.08 before Friday's positive US payroll data. Job creation came in more or less as expected at 178,000, allowing the Rand to strengthen slightly before rallying late on Friday night as S&P kept SA's credit rating unchanged. Don't pop the champagne just yet, as all 3 credit agencies have changed their outlook on SA to negative.

Unless SA's economy grows at a faster pace, don't be surprised if we get downgraded next year June…

This week the market will be watching what happens in Europe following the Italian referendum decision and subsequent resignation from the Prime Minister. The Euro has reversed most of its losses, a 2 year low, and the risks seem to have subsided.

Locally this week we see SA annualised GDP today, consumer confidence and mining on Thursday. Also Eurozone main refinancing rate on Thursday.

In other news, it is said economy professors had their best week of the year as a photo emerged from Cuba with soldiers pushing the jeep carrying Fidel's, ashes after it broke down.

Have a great week.

It's been a busy week, so let's address some of the key events:

Unemployment figures released early last week showed that SA's jobless rate rose to the highest in over a decade as the unemployment rate rose to 27.1% for the quarter ending September. A figure hire than the 26.6% for the previous 3 months and the highest since 2003. A day later, SA's inflation figures were released – the rate increased from 6.1 to 6.4% a month earlier, meaning that more people without jobs or an income are paying higher prices for their goods.

This combination of punches to the body led the SA Reserve Bank to leave interest rates at 7%; unchanged for the fourth straight meeting, as it warned that inflation is getting too high. With the Rand and other emerging markets being very sensitive to the US Dollar and US economy, the Rand was quiet on Thursday as the US celebrated Thanksgiving Day. The ZAR was trading range bound between 14.01 and 14.30 on Thurs and Fri as it looked for direction from the Moody's credit rating review on Friday night.

The rating news varied – while Moody's did not downgrade SA's rating, Fitch changed our outlook from stable to negative. A bit like celebrating a draw in sport I guess, as we really should be aiming for an improvement and not a "no change". The market reacted favourably as the ZAR opened the week below 14.00 - the first time since the US election. Helping the Rand strengthen was investor opinion that the Trump trade was overdone, resulting in a gain for emerging market currencies.

On Monday and Tuesday, the Rand strengthened the most in almost a month, leading global gains against the dollar, as senior members of the ANC called for President Jacob Zuma to step down. The ZAR rose as much as 2.8% and was trading below 13.80 last night. Amazing how much Zuma is priced into the Rand, but it seems the President has survived this round. No surprises if we see a cabinet reshuffle or a few ministers resigning.

While local politics remain the focus and draws the attention at this time, global markets and sentiment remain Rand positive.

Some key data out this week including SA trade balance on Wednesday, followed by Eurozone unemployment and SA Manufacturing and CPI on Thursday. It is US payroll week, so look out for the big one on Friday afternoon – US unemployment.

Have a great week.

After action satisfaction – Rand looks to be strengthening as markets stabilise post US election.

Not the most exciting week with event risk being low and markets seeming to have stabilised after the US elections. Chances of Rand weakness remained high as US yields and the USD continues to surge as US rate hike seems very likely in December.

As the days rolled on after the election, conditions have been calmer, however the Rand is still on edge. We are still seeing a negative bond flow with foreigners taking billions out of the country – R2bn last Wednesday with local retail sales disappointing and indicating the economy is contracting. Rand opened at 14.27 against the USD on Wednesday and closed the day at 14.44. From a technical view, it looked as though the ZAR has broken its channel and heading towards the 14.70 and eventually 15 mark.

Surprisingly, even having spiked to 14.65 against the USD, the Rand seemed to start the week off fairly positively. The US market has stalled as US treasury yields have eased and the dollar has come back from its highs. All of this was good news for emerging markets with foreigners buying R2bn worth of local bonds on Monday. The ZAR appreciated to close at 14.19 on Monday, after opening the day at 14.44. In other positive news, a minimum wage of R 3,500.00pm was agreed.

Early in Tuesday trade, the ZAR strengthened even further – at the time of writing USDZAR was below 14.10.

Not a great deal of events and risk this week, especially with the US Thanksgiving holiday on Thursday, but look out for SARB interest rate announcement on Thursday and also Moody's rating decision on Friday.

Have a great week.

Now that the Brexit hang over is slowly fading; Global Markets are stabilising and bouncing back as investor risk appetite seems to return – good news for emerging markets such as the Rand.

While risks in the UK remain – the nation, political parties, football team and even Top Gear now remain leaderless – GBP seems to have stabilised, although at much lower levels than before the referendum result. While asset prices bounced back, the ZAR started last week on the back foot, having lost almost 4% by Wednesday.

By Thursday last week, the ZAR opened at 14.80 – some 3% weaker than a week ago pre-Brexit and it has recovered all its losses against EUR and of course was "stronger" against the GBP, due to GBP losing over 10% in all this drama. The main benefactors are USD and gold as both have increased drastically as investors fled risky assets for safer havens.

Out of the ashes a phoenix will rise; this was in SA's surprise trade surplus of over R 17 billion in May – the largest monthly surplus on record and exceeding the R 4.1 bn expectation. Before we get too excited, trade balances are usually measured in months of 3, but this certainly is a good sign. On the same day, news came that the Competition Commission has approved the SABMiller deal which further polished the ZAR's armour.

The Rand reversed the week's losses and strengthened more than 3.5% against the dollar and reached its peak on Monday before the latest job data showed that SA cut 15000 jobs in the formal non-agricultural sector during January to March this year.

On Tuesday morning Emerging Markets ended a 5 day rally as investors locked in their recent gains and demand for riskier investments faded. We often see this trend where some investors take their profit and the market is flooded with stock, causing an oversupply and drop in price. The Rand slid 1.4 % - the most among 31 major currencies amid weaker Asian markets and the poor job data.

And finally, applications are welcomed for the role of SA's Public Protector. Outgoing Protector, Thuli Madonsela's term ends in October this year and so far 59 people have agreed to stand for the R 2.24m salaried job.

Have a great week.

There is not a lot to be said that has not already been said regarding the UK's decision to exit the EU. Panic struck and markets crashed in the uncertainty that followed and still remains…

While Brexit is the first and obvious news item on everyone's list, there are also one or two other factors that played a small part, albeit completely overshadowed, in the markets last week. On Thursday the Rand actually strengthened for the 5^th straight day on what is now irrelevant Brexit hopes. Another contributing factor in the stronger Rand was that inflation slowed down to 6.1 % - almost in line with targets.

In the US, the Fed remained dovish which further helped the ZAR.

Of course the above is pretty much immaterial, given the Brexit result and the effect it had on the market:

• Almost $4 trillion ($ 4,000,000,000,000) wiped off the value of global equities
• GBP plunged to weakest levels since 1985 and Euro suffered biggest drop since introduction
• ZAR fell almost 8% against the USD to 15.60 after opening at 14.57 on Thursday
• Johannesburg gold index jumped 11%
• PM David Cameron resigned, UK's credit rating downgraded

Adding to the uncertainty is that it was not an economical decision, but a political vote that drove the UK to leave the EU – early reports show that since the vote, there has been a number of violent attacks on migrants in London as UK Nationalism spreads. Could this spill over to other countries and are we seeing the end of the EU altogether?

Emerging markets, the ZAR included, took an absolute hammering as investors opted for the safe havens of USD and gold. Markets remained volatile as the GBP and ZAR strengthened on Monday morning, before the selloff continued. The Rand's slight saving grace is that net inflows on Friday stood at around R 4.2 billion as investors bought gold and gold stocks. This trend continued on Monday as investors bought stocks of around R 2.4 billion.

Emerging market assets and currencies strengthened slightly on Tuesday morning as South Korea and Japan stimulus measures helped ease investors' concern that the Brexit will result in slow global growth. As a result, the Rand appreciated as much as 2.1 percent against the USD to 15.13.

While there are a number of important meetings and data this week such as UK GDP, China manufacturing data and Eurozone unemployment rate, expect the market to remain volatile as it deals with its biggest hangover in 50 years.

And finally, spare a thought for the English. Last night at the Euro 2016 Football championship they lost to Iceland, a country with less inhabitants than England has football players. This makes England the first country to ever leave the Euros twice in less than one week.

Have a great week.

The Rand has been seesawing up and down as the market still digests the ratings surprise and negative growth number, but it has been global risk and a struggling Dollar that has given the ZAR direction…

Markets move on sentiment; how investors expect a stock or currency to perform. This was evident towards the end of last week as emerging markets fell and currencies weakened as investors speculated that the gains following the poor US data were overdone. The poor US data led investors to believe that the Fed will not raise interest rates anytime soon.

The Rand lost the most among emerging markets, weakening as much as 2% on Friday as investors sold higher risk assets. After closing below 15 to the USD Monday through to Thursday, the ZAR weakened through the psychological 15 mark to close above 15 on Friday.

On Monday morning the market opened significantly weaker @ 15.20 versus the USD and 17.13 and 21.63 versus EUR and GBP respectively.

The latest GDP figures released last week were shocking – the SA economy shrunk by 1.2% and while we are technically not yet in a recession, the writing is pretty much on the wall. This figure was much larger than expected and the only positive is that we will probably not see many more rate hikes this year. Unless we see drastic change, given the latest disappointing GDP figures, we could very well expect S&P to downgrade SA to junk status in December which will lead to Rand weakness as the market starts pricing this in.

While the Rand is very much following the global trend and continues to look forward to the US Fed rate decision and comments, as well as mounting Brexit fears, it is local data that grabs our attention today. In the SARB's Quarter Bulletin, SA's latest current account and balance of payment figures will be released. A deficit is expected which means that SA imports more than it exports.

The Rand remained volatile yesterday and this morning, weakening from 15.15 to 15.30 on Monday, before strengthening again in late Monday trade and early on Tuesday.

Other data to look out for this week includes UK inflation and US retail sales data out today as well as the big one, US Federal Reserve rate decision tomorrow.

And finally, good news for SA wine producers and wine lovers in Europe: the EU agreed that SA can export 110mln litres of duty free wine, this is up from the current figure of 48 million litres. Make it rain wine!

Have a great week.

If last week was a theatre show, then Friday night would have been the grand finale starring the Rand, the leading character - bowing out to a thunderous applause…Yes, S&P did not downgrade SA's credit rating and the ZAR strengthened to below 15 against the USD.

While there was a lot of data released last week, it was Friday afternoon that drew all the attention – US non-farm payroll figures were weak; only 38 000 new jobs were added in May compared to an expected 164 000. What this means is that the Fed is unlikely to increase the interest rate in a few weeks – this means that global currencies benefit, as the return on investment remains better elsewhere.

Although unemployment is down to 4.7% in the States, the data failed to impress and caused the ZAR to strengthen, along with other emerging markets.

The Rand gained us much as 2.2% following the US payroll data as the market focussed on the next big announcement; Standard and Poor's credit rating decision. S&P announced that it will keep South Africa's investment grade unchanged, however still warned the outlook is negative. The Rand almost immediately and instinctively strengthened and rallied a further 1.3% to as low as 15.10 versus the USD on Friday night. Friday marked the 5^thstraight day the ZAR strengthened – the longest period of gains since November last year.

On Monday the Rand continued this trend and broke the psychological 15 to 1 mark against the USD and dropping below 22 versus GBP and 17 versus EUR – over 5% in gains as the market still dissected the data from Friday and commodities rebounded. One could be forgiven to be of the opinion that the ZAR has overextended itself and that gains are not sustainable…especially considering that SA business confidence is the lowest it has been since June 1993.

Early on Tuesday commodities traded higher, captained by oil which is trading at a 10 month high, and in turn boosting investor confidence. The renewed sentiment is helping emerging markets – the Rand is currently trading @ 14.83 versus the USD.

Event risk is low this week, but look out for SA mining data on Thursday, Chinese trade balance on Wednesday and Chinese new loans on Friday.

And finally, here is some food for thought: Donald Trump, with all his wealth, is worth $10bn less than if he had simply invested his inheritance in the stock market. Gives a new meaning to the phrase "trust fund kid".

Have a great week; let's make it rain.

On Friday evening S&P will deliver its review on SA's credit rating and whether we get downgraded to junk status. Best you get the champagne ready, for as Napoleon said "In victory one deserves it, in defeat one needs it."

At this stage a downgrade in June still seems 50/50; Standard and Poor has been pretty non-committal in their comments thus far, giving fairly standard warnings over weak GDP, state finances and quick fixes.

A surprise jump in new US home sales to an eight year high, Brexit seeming less of a possibility and a better Greek situation all increased investors' appetite for risk last week and helped emerging currencies and the ZAR make some gains. On Wednesday the ZAR opened @ 15.61 against the USD, moving to as "low" as 15.50.

While higher oil prices are not a positive for the Rand and our economy in general (considering we are net importers), in the short term it does inject confidence into the global economy. Oil is again trading above $50 per barrel, meaning local fuel hikes (make sure you fill up), but also a more stable global economy and an increase in risk appetite. In saying all of this, investors and traders still remain cautious – this is evident in volumes last week as it was the quietest in the currency markets since January.

With Monday a bank holiday in the US and UK, trading and movement has been quiet. We expect the Rand to remain range bound throughout the week with no massive movement or events as it keeps its eye on the horizon…On Friday we expect big swings and volatility as S&P will release their SA credit ratings and the US non-farm payroll data will provide direction for the US Fed meeting and whether Chair Jennet Yellen will increase US interest rates.

At the time of writing, the ZAR was trading slightly weaker than Monday at 15.84, after opening at 15.79 against the USD.

The risk of a downgrade is evident in the bond market as SA companies are not prepared to put their chips on the table, given the poor odds. Corporate bond sales in the second quarter have slumped 15 percent from a year earlier.

And finally, Nelson Mandela's will has been finally been read and it seems the great man continued his good work right to the end; all employees, including cleaners and cooks, were handed cheques of R 50,000 apiece. Top bloke!

While Friday's S&P and non-farm payroll data steals the attention, keep an eye out for SA money supply and private sector credit on Tuesday and SA electricity consumption on Thursday.

It has long been said that the biggest risk the ZAR faces is politics. One would be forgiven to think that there "is no chance" that the ZAR would weaken from 15.30 vs USD at close of play on a Friday to over 15.70 on Monday morning…

Looking back, it is always easier connecting the dots; we saw a big ZAR sell off on Tuesday and even Wednesday last week, with no real driver (up until now?) – the losses, fortunately, were short lived as Wall Street had its best day in two months, which helped the Rand and other emerging markets improve.

With event risk being low and not much data being released during the middle of last week, the Rand stabilised somewhat. It was expected that the ZAR would strengthen, but sentiment remained low, Wall Street reversed slightly and renewed pressure kept the Rand trading range bound.

Over the weekend the Sunday Times reported that the Hawks are lookingtoarrest Pravin Gordhan, for his alleged role in "espionage" with regards to a case related to the activities of SARS. Given our recent history (remember Nenegate?), and the sensitivity of the unpredictable beast we call the Rand, the news sent the markets tumbling.

Government bonds were down on Monday and the Rand hit a two month low; on Monday it was the worst performing currency in the world, bar the Venezuelan Bolivar. It went as high as 15.74 vs the USD before recovering and closing 1.5% down at 15.63 – an official statement from The Presidency denying the report / rumours, helped the ZAR recover somewhat.

Brent Crude oil gained as much as 2.5% on Monday and commodities rose, which also assisted emerging markets and the Rand.

From a data perspective, local politics will play second fiddle to US data as CPI, average weekly earnings, industrial and manufacturing production are all being released this afternoon.

…And finally, ABSA's (Barclays Africa) CEO Maria Ramos generated more profit for every unit of pay last year than any of her South African peers, including Investec's Stephen Koseff. Investec, incidentally, is mentioned 24,062 times in Panama Papers…

Have a great week; let's make it rain.

The positive news about Moody's leaving South Africa's credit rating unchanged late on Friday was quickly forgotten when Monday's jump in the SA unemployment rate. Unemployment grew by 355,000 in the last quarter…

A decline in risk appetite saw the ZAR weaken more than all the other emerging market currencies last week as manufacturing data from all corners of the world indicated weak growth. The IMF lowered the growth outlook for Sub-Saharan Africa at roughly the same time as the European Commission lowered its outlook for the EU; as expected, the market reacted and global equities fell.

The ZAR sell off continued last week as the currency remained volatile; spiking to 15.15 against the Dollar on Thursday, before slightly recovering. Friday's US payroll data did neither disappoint nor excite – new job numbers were less than expected, but the unemployment rate fell. Emerging markets reacted as can be expected; remained volatile; jumping up and down like a cat on a hot tin roof before finally stabilising as Wall Street reversed earlier losses.

Moody's decision of not downgrading SA's credit rating – although with a warning and negative outlook – was seen as a surprise and minor victory for the Rand. The market reacted positively on Monday and stocks, along with the Rand, opened firmer. The next big rating decision will be S&P's rating update on 3 June 2016 which, given the latest unemployment figures, could very well not be as positive.

A slide in commodities, along with questionable leadership and priorities, saw what can only be described as shocking and worrying unemployment figures released on Monday. According to Statistics SA, unemployment increased from 24.5% in the last quarter of last year to 26.7% for the first 3 months of 2016. Simply put; the number of employed people decreased by 355,000 – these are deeply worrying figures and signals a very low or even zero growth rate.

This is not positive news and the market confirmed investors' concerns as the Rand weakened at an aggressive rate, losing more than 2% on Monday and Tuesday to well over 22 to the GBP and 15.30 to the USD.

SA has now dropped out of the top 25 foreign direct investment destinations; a list on which it held the 11th position as recently as 2011. While we remain reasonably positive on South Africa's future, one cannot discount the benefits of diversifying and investing in other countries and currencies.

There is little international data to take note of this week and locally, expect the news and market to remain focussed on the unemployment data.

Have a great week; make it rain.

The South African Rand advanced as much as 1.2% against the USD towards the end of last week as SA showed a surprise R 2.9bn trade surplus compared to a deficit of R 1.1bn in Feb.

The High Court judgement to reverse a 2009 decision to have President Zuma's corruption charges thrown out, further helped the ZAR appreciate.

The ZAR has strengthened as much as 9% against the USD this year, trading at its lowest levels since Nov 24 last year. On Friday the 29^th, the Rand was @ 14.115 against the greenback. Poor US data and a weaker USD has helped Emerging Markets as investors looked elsewhere for returns.

Earlier last week, the Rand gained as a Deutsche Bank Report stated the Rand is the most undervalued currency in the world; capital inflows into SA resumed, but not as aggressively as a few weeks ago. On the local front Lungisa Fuzile, the National Treasury Director, had his contract extended for another 2 years – news that will resonate positively with foreign investors, but potentially not the best timing for an announcement as the local market was in long weekend mode

The market responded positively to the High Court decision that President Zuma will now potentially face 783 cases of corruption charges; we can again look to our neighbours across the Atlantic, Brazil, where the market bounced positively when their president found herself in a similar situation a few weeks ago.

On Tuesday, the Rand somewhat reversed its gains, dropping over 1% against the USD on the back of weak Chinese manufacturing data, as investors opt for less risky currencies.

We can expect a fairly quiet 4 day week, but look out for the ECB's Economic Bulletin on Thursday and especially the US non-farm payroll figures on Friday, which could give the market some direction.