Despite the rest day on Tuesday, the Rand could not catch a break this last week, as global tension rose once again...
Heritage Day or Braai day on Tuesday provided some calm, but the news from the US spoilt it...
And that set the tone for the week with the Rand trading back up over R15/$.
A very quiet week of events means it isn't a big Rand Review today, but there is still more than enough to sink our teeth into. Let's get into it!
Here were some of the biggest headlines from the week:
- Trump Impeachment - the proceedings have begun, as Democrats have finally pulled the trigger on what they have threatened to do for 3 years...
- Brexit unresolved - it is a case of one step forward, two steps back with Brexit, as the deadlock continues with Johnson fast losing power and support
- Bank strike fears - at the 11th hour, the court action stopped the biggest march in 99 years
- Huge Eurobond sale - South Africa raised over R74bn in its biggest ever sale to date
- Bitcoin crash - as per our forecasts from last week, Bitcoin plummeted down to sub $8000!
The Rand opened at R14.90 to the Dollar, expectant over further Trade War news, or anything on the Iran situation...
...but it turned out to be a different story which dominated the week:
The Democrats came out all guns blazing, claiming that a 'whistleblower' had provided information that President Trump tried to get Ukraine to interfere in the 2020 elections.
As it turned out, the White House did release notes of this call, wherein Trump is said to have asked the Ukrainian President to investigate the business dealings of Joe Biden (one of the candidates for President next year), but it was not a quid pro quo (used as leverage in exchange for foreign aid), as was claimed.
How far this impeachment inquiry will really go is anyone's guess - but with a large Republican majority in the Senate, it is unlikely that there will be much substantial which comes out of it.
It seems, once again, that the desperate Democrats are doing all they can to oust Trump - and protect front-runner Biden.
The fact is that these kinds of conversations happen between Presidents all the time!
And if there are allegations of shady dealings with Ukraine by an ex-Vice President and his son, surely he has the right to ask that this be investigated.
But we will see - whatever the case, markets did not like this news.
Despite all the volatility and trade wars etc, Trump being impeached would have massive global ripple effects, and emerging markets had a difficult week in concern over this.
The Rand lost ground Wednesday to break back over R15/$ and pretty much held there until the end of the week.
Over in the UK, the Supreme Court ruled that Boris Johnson's decision to suspend Parliament was unlawful.
So now Parliament is effectively back in session as it should have been, had Johnson not suspended. However, the clock is ticking toward the October deadline, with no clear end in sight apart from a hard Brexit...!
While Boris continues to put on a show, the EU is fast losing patience, sighting his recent proposals as lacking in detail and seriousness despite the 31 October date fast approaching.
The Pound is continuing to suffer, as its downtrend vs the Dollar and Euro continues.
And then in other news:
- It was a case of disaster narrowly averted as the courts intervened to stop the biggest bank strike in 99 years. The Labour courts ruled that there had been no proper consultation at Nedlac before this strike was announced. Thankfully, this meant that the strike did not go ahead. Even Cosatu warned that workers shouldn't risk their jobs by staying away...but the risk of it going ahead in the future is still very much there.
- The South African government launched its biggest ever Eurobound sale in history, selling R74bn or $5m worth, offering returns that compensated investors for increasing fiscal problems. The effective 'discounts' seemed to be enough to gain extra interest, as buyers piled in.
- Eskom's local woes are still very real, and yet it seems they are being called on across the whole of Africa to try and solve everyone else's problems. First it was Zimbabwe, now Zambia is going to be importing 300 megawatts for 6 months to try and cover its shortfall of 700 megawatts - which is currently causing daily power cuts of about 8 hours. How much more can Eskom sustain?
- On Friday, Ramaphosa unveiled an 18-person economic brain trust to try and spur growth in South Africa. This is a plan first announced at his first SONA last year, and is finally becoming reality. Along with the investment drive, these two bodies are meant to be what really takes the South African economy forward. It remains to be seen what moves this committee makes - and what power they have to change the economic situation.
- And lastly, Bitcoin crashed catastrophically this last week to touch below $8000, leaving investors crying out for some respite. However, this was exactly per our forecasts from last week on our DFS Global Markets website, when we predicted a move down to sub $8500. Learn some more here if you are interested in Bitcoin forecasts...
And that was that on the news side...
The Rand endured a tough end to the week, moving up and over R15.10/$, even testing R15.20...
A rather glum finish to a difficult week for the Rand!
The Week Ahead (30 Sept - 4 Oct 2019)
With September come and gone, we are into a new month tomorrow, and with that comes a lot of economic data releases, both local and international, with the three main ones to watch being SA Balance of Trade, US Trade Balance and the biggie - US Non-Farm Payrolls.
The Rand has had a bad run last week, but can it turn it around?
Or are we headed higher in the weeks ahead?
Our analysis is showing two possible scenarios, based on the application of the Elliott Wave Principle (together with our unique combination of price ratio, momentum and time cycle studies).
This makes the next week or so a very important one, and we will be watching certain key levels as well as how the wave patterns evolve to give us a hint.
To get a look at what we are speaking about, use the link below to get access to our forecasts for the next 14 days.
No card needed. Gratis!
(You don't want to regret not having done so this time next week...)
Look forward to hearing from you.
To your success~