Another week, and a more quiet-ish one for the Rand.
The market has been pretty stuck in the sideways band of trade, pivoting between the R14.00-14.55 range over the last few weeks.
It has given everyone a chance to breathe just a little...
But what does the future hold?
The markets remain turbulent globally, particularly in the stocks, commodities and crypto worlds.
Let's get into the full review...
Before we start, here were the biggest headlines from the 5 days:
- Zuma To Jail - the big local news for the week as the ex-President is now officially behind bars!
- Ransomware Chaos - another week, another hack, attacking businesses, schools, cities and more
- UK Re-Exit - the 'pandemic' is once again subsiding in the UK...is this for the last time now?
Due to the USA holiday of Independence day, it pretty much meant we had a late start to the week for the USD/ZAR market.
When we hit Tuesday, that was when the action began in earnest.
Local worries persisted, as the government continued its authoritarian lockdown agenda, stating the '3rd wave' apparently had hit higher levels compared to wave 1 and 2, while the number of 'vaccinations' (read 'mass gene therapy experimental injection') stood at 3.3 million. That the 'vaccination' drive is continuing, despite the exponential spike in adverse effects and deaths since the 'vaccine' rollout started (not being reported by mainstream media) is concerning and ominous.
In more encouraging news though, things continued to progress with the prosecution and arrest of Jacob Zuma.
Eventually, on Wednesday, things came to a head as a team of heavily armed police units was on its way to arrest the former statesman at his home in Nkandla. Zuma turned himself in, and surrendered to police less than an hour before midnight on Wednesday to start serving his 15-month jail sentence.
Zuma will be the rainbow nation’s first democratically elected president to be taken into police custody for contempt of the Constitutional Court.
President to Prisoner. Quite a change of fortune. But surely the right one, after years of corrupt dealings - with contempt of court (the charge) just being one of the many lawless acts.
By this stage though, the Rand had already made it's moves on Tuesday, moving to hit R14.42 from where it had opened on Monday at R14.25.
The reaction to the arrest itself was fairly subdued, as most didn't believe it would have any lasting effect - and that the corruption drive needed to kick up at least another 10 notches.
But regardless, justice is justice.
And then in other news:
- Looking abroad, market participants remain pinned on the latest Fed meeting minutes as they come out. Nothing significantly new stood out in the minutes this last week that could change the outlook for monetary policy, however it did acknowledge that the FOMC is prepared to act on inflation when required.
- Heading abroad, the UK’s Prime minister Boris Johnson announced that a majority of the UK’s lockdown rules are set to end on 19 July, depending on a final review on 12 July of the most recent data. They call it “Freedom day”! This means, among other things, no compulsory masks by law, no limit on gatherings and no instruction to work from home.
- Through the week, stacks of different companies, schools and even cities suffered under yet another ransomware attack. These are gaining speed at an alarming rate, and it is building toward a 'cold war' of sorts between Russia and the USA, as attack after attack hits the USA without a single Russian setting his foot on the country's soil. This new world of digital warfare is alive and growing fast, and whoever keeps ahead of the game has got a MAJOR foothold toward global domination. All the while, China is watching as these kinds of acts are carried out, and being experts themselves, you can well believe that they are taking notes… this week it was the Russian group REvil, the same group who took down JBS SA. This attack affected entire cities in Maryland, companies in the US, companies in SA, schools and more. When will it stop? REvil wants $70m as ransom payment to return everything to normal…
- There are more companies whose view matters on SA than the Ratings Agencies, and one of those is a firm like BlackRock. They downgraded their outlook on the country and other emerging market equities, including China in their listing too. Their concerns were the structural scars left behind by the pandemic which are not easily seen and even less easily fixed.
- Locally, another big talking point was the TERS payments…Temporary Employer-Employee Relief Scheme (TERS) was put in place in the midst of last year's lockdown, but eventually was suspended in March 2021 due to admin problems and fraudulent payments. Now with the country back to level 4, it is the view of many that the government is incumbent to come in and assist those affected by this next lockdown...
To get back to the Rand, trade continued to be mostly sideways and fairly calm.
Friday saw the market track down to touch R14.20, before eventually closing at the SA end of market around R14.25 to end the week's trade.
And so we await the breakout with baited breath...
The Week Ahead (12-16 July 2021)
The Rand is never kept quiet for long, so we know that the breakout is coming soon.
This next week does not have a stack of events, but this never stopped the ZAR from making big moves.
Here are some of the noteworthy ones:
- SA - Retail Sales
- US - Retail Sales, Jobless Claims, Fed's Chair Testifies
- EU & UK - Consumer Price Index
With plenty going on politically, economically and socially around the globe, we have learnt to expect the unexpected!
Once again, we will continue to filter out the noise and simply follow the what the charts themselves are telling us, based on our Elliott Wave based forecasting system.
I suggest you do the same!
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Look forward to hearing from you.
To your success~