Breaking key levels, the Rand strengthens further...

While the Rand did not gain a lot in terms of value this week, it broke some key levels...

...and this meant that this week was deemed as a very successful one.

Despite:

  • Economic Worries
  • Zuma's future being uncertain
  • Worries surrounding land expropriation
  • Severe drought in various areas like Cape Town
  • And many other factors...
...we saw the market push to test the R12/$ - its strongest level in 2.5 years.

Who would have thought?

Let's have a closer look at how it went down...

How It Happened (15-19 January 2018)

On Friday, we released our next forecast which was still looking at the same trend as the previous week - downwards towards the 11.96-11.50 area...it was going to be another interesting week, that was for sure.

USDZAR_STU Click to enlarge

Some key points from the week:

  • Net closes on Guptas - Asset Forfeiture Unit seizes R1.6b of Gupta assets
  • SARB Interest Rate Decision - rates were kept as they were, with a lot of build up not ending in much
  • ANC Meeting - another NEC get-together due, an expectant public waiting for news of a Zuma recall...
  • Cryptocurrency crash - on Tuesday and Wednesday, the global cryptocurrency market as a whole endured an enormous dip, referred to as a 'crypto bloodbath'!
  • Apart from the above, a very quiet week ensued once again...

And as we headed into the new week, no one was expecting much of a start. It was Martin Luther King day in the USA, and markets were closed.

Attention for the week was all on the ANC meeting and the SARB Interest Rate decision. Apart from that, it was a waiting game.

However, a choppy market continued on Monday, eventually leveling out around R12.30 at the end of the day.

Ramaphosa continued to talk about land expropriation, saying "no one should be nervous" about it...unfortunately, many are!

How can investors not be nervous when your property could be taken away?!

Onwards to Tuesday - and the big local news being that Asset Forfeiture Unit (AFU) had woken from it's Zuma-induced slumber, and obtained a preservation order against Gupta-linked company Trillian and international consultancy firm McKinsey, with assets to the tune of about R1.6-billion to be seized.

This, together with and some news on Global arena, where it was said that a weakening greenback, favourable global markets, coupled with EUR/USD touching 1.23 made for Rand gains, where given for reasons for the Rand's move stronger.

All we were looking at was how the Rand was moving in line with our forecasts....which it was (albeit a bit slower than anticipated), even touching R12.19 - its best level since June 2015

Wednesday saw some volatility as the market bounced between R12.34 and R12.22 amidst news from Finance Minister Gigaba announcing that "plans are on track" for Free Higher Education (a disaster in the making no doubt...)

Globally, cryptocurrency markets just plummeted - see this image below of the global market cap (basically, how much value is in cryptocurrencies right now):



From being over $800bn last month, and over $700bn on the 15th of Jan - it crashed to $417bn in around 48 hours! Crazy stuff...

Considering the week we had had, many expected a quiet close to the remaining 2 days...

...no such luck.

Despite no Zuma recall announced (yet) from the ANC meeting, and SARB keeping the interest rates steady, the Rand went for a flip in the next few days...



The Rand's brief dive to a new 32 month low of 12.06 was fairly short-lived, as it it gave half the gains back.

The Rand's run in 2018 has been excellent, but it has been a case of 2 steps forward, once step back.

It is no wonder that persons are warning everyone to be cautious - there is a nervous optimism about - but what is key here is to just keep focused on the charts. Gut-feel and looking at events is not going to cut it!

Overall, the bumpy ride on Friday afternoon meant that we ended off the week almost 20c better off than the past week's close.

Another week closed out, a fairly uneventful one, but at the same time, a very important one...

The Week Ahead (22-26 January 2018)

The Rand's brief dive to a new 32 month low of 12.06 was fairly short-lived, as it it gave half the gains back.

The Rand's run in 2018 has been excellent, but it has been a case of 2 steps forward, once step back.

It is no wonder that persons are warning everyone to be cautious - there is a nervous optimism about - but what is key here is to just keep focused on the charts. Gut-feel and looking at events is not going to cut it!

Overall, the bumpy ride on Friday afternoon meant that we ended off the week almost 20c better off than the past week's close.

Another week closed out, a fairly uneventful one, but at the same time, a very important one...

For us, what happens is immaterial - we will simply be keeping an eye on the patterns of sentiment as they unfold - giving us a much clearer picture of where the Rand is headed than trying to decipher the news....

Why not join us on the inside track - and get an unbiased, objective view of where the market is likely to head the next few days, weeks, months and years.

Start Your Free Trial Today


Look forward to helping succeed~

Kind regards,
James Paynter

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