Welcome to our Weekly Rand Review for 10 October 2016, where we take a look at how things unfolded last week and give you our thoughts for the week ahead.
A real See-saw Week.
The Rand played games with SA (and the rest of the world) as its undecided, fidgety moves kept everyone on the hop.
It featured 4-5 sharp moves, which sent shockwaves throughout the economic market. However... Come this morning, the Rand had only moved a matter of about 11c in actual price change!
So as we said, a See-saw week. But what does it mean? Although there was not much actual movement, we believe this last week had some definitive moments in the long term game.
For a start, there were some massive economic events - one of the biggest combination of events we have seen all year.
But let us take a look, to see if we can pinpoint those exact moments...
How It Happened (3-7 Oct 2016)
Monday began with the Rand trading at R13.75/$... A respectable but precarious position.
Our updated forecast (see below - click to enlarge) showed this very tight situation, with the chances of the Rand bottoming out very soon only being slightly more likely than the chances of it strengthening further.
However, before the morning's first cup of coffee could be consumed, it had already strengthened over 10c in the first hour.
It continued to strengthen throughout the morning, moving to a far more respectable figure by midday, trading well below R13.60 to the Dollar as it pushed into the 13.73 to 13.50 target - and then reversed at 13.54, pushing back up to 13.68 by the close of business.
Tuesday saw the Rand pretty flat as it traded its way close to testing Monday's - until lunchtime, when it made its move.
In just a few hours, all the previous ground which was made up earlier in the week, and them some on top of that, was lost.
It left the Rand trading on Tuesday evening close to R13.85/$.
Was this a delayed reaction to the SAB deal which went off last week? Or was it due to the Turkish Iira's poor performance which supposedly affected emerging markets?
Who knows - but it certainly validated our forecast for a bottoming out..
Wednesday saw a slight retracement after that frantic spurt on Tuesday evening, as the waters calmed a little with the Rand strengthening back under R13.75.
As the week began to bear on, our focus started to move onto Friday.
This was was one of the biggest economic event-filled days we had seen in some time.
Anyone who was not prepared for volatility was going to be badly caught out!
The line up, as shown on our Rand Fundamentals which our Premium subscribers have access to, began with the following:
- SA Foreign Exchange Reserves - 08:00 SAST
- USA Unemployment Rate - 14:30 SAST
- USA Non-Farm Payrolls - 14:30 SAST
- UK NIESR GDP Estimate - 16:00 SAST
- USA FOMC Member Mester Speech - 18:45 SAST
- USA Member Brainard Speech - 22:00 SAST
Friday was expected to generate some massive activity... and volatility was expected to be at its very worst.
Thankfully those of you with access to our Rand Fundmentals - a tabulated description of all the upcoming important economic events - would not have been caught out.
Thursday morning dawned, and our next forecast was due. It showed the Rand in a real precarious spot for the next few days...with a break out of a narrow range required to confirm direction...
The focus was certainly on Friday, but some anticipative movement was also expected.
For the most part of Thursday, the Rand stayed calm. However, late afternoon saw it spike above R13.90, and past the crucial 13.8442 level.
From the looks of things, this was perhaps the end of the Rand's good run for now on the short term for the Rand.
BUT... We still had Friday to get through. And with this many events bunching up on this day, it leaves the Rand wide open to some major moves.
The day dawned...
And actually began fairly slowly considering the expectations we all had.
Some reaction had to come, and it did around about midday as the Rand spiked up above R14/$ - probably a combination of the Foreign Exchange Reserves and some anticipation of later events.
Then came the 14:30 slot... A slew of events came up one after the next.
And the Rand reacted immediately. In no time, it had strengthened its way to under R13.80/$!
It touched R13.72/$, giving everyone some breathing space
...And then it turned around again! On Friday evening, the Rand was back to trading above 13.90, and everyone was just left scratching their heads...
The Week Ahead (10-14 October 2016)
Just to give us one more suprise, the Rand then strengthened more than 10c during the early hours of the morning on Monday in Asian trade.
So we enter the week with the Rand trading at a fair rate of around R13.75. Not much changed since the start of last week, but a lot has sure happened! The week has a lot of questions surrounding it, as persons are very concerned as to the stability which we are just not seeing!
Without some idea of directions, persons are going to be kept wondering as to what they should be doing and expecting next.
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Last week was a real humdinger. If you are not a premium subscriber right now, I suggest you hop on board in order to keep ahead of the game.
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