Welcome to our Weekly Rand Review for 26 September 2016, where we take a look at how things unfolded last week and give you our thoughts for the week ahead.
Were you one of the many caught out by the Rand this past week?
Not only had the Rand strengthened about 50c, but it had come completely out of left field. With negativity, worry, growth concerns, economic problems, Zuma's incompetence, rioting and much more, the Rand had (against all odds) strengthened versus the US Dollar.
There is no way to justify it purely in economic terms... but maybe we can get some idea of how such a week has worked out, as we take a look at how it all happened.
How It Happened (20-24 Sept 2016)
Monday morning's forecast (see below - click to enlarge) showed that the Rand was expected to be bottoming out shortly in the 14.12-13.98 area. This scenario was the preferred wave count which had held so far.
...the Rand had other ideas...
It strengthened steadily throughout the day.
And then a bit more.
And then yet a bit more after that.
By midday on Tuesday morning, the Rand had pushed all the way under R13.90/$ and it required for us to do an update on the fly (we never leave our subscribers wondering if the market has changed direction).
The update showed (see below - click to enlarge), that the Rand had found some more short term strength against the Dollar, and was due to break even lower down into the 13.89-13.62 areas. Surprising news...
We then saw it do exactly that in the coming few days, as the positive news continued to flow for South African Importers!
The Rand strengthened steadily into the sub R13.70 levels - these are levels we have not seen since Gordhan had his initial confrontation with Hawks.
Some good news that did come out of the week was that the US Federal Reserve held off an interest rate hike and although the institution indicated that they might increase interest rates in December, the general feeling was positive about this.
Good signs - but everyone was worrying... how long is it going to last?
Some relief for most of SA - but it did not come without increasing worry.
Volatility was certainly abundant, and a sharp eye was needed to be kept on the markets.
The Rand kept going and was soon under R13.50/$ and was still going. On Thursday morning, our next forecast was published. It showed the Rand at R13.40 and due to go just a little further.
Click to enlarge
The market bottomed out just above the top of our idealized target area (R13.37/$) - the Rand's best rate for over a month - before rising, and continuing to do so, steadily creeping back up toward R13.50 and beyond.
Come Friday afternoon, it was trading back of 13.60 and closed the week after hours above 13.70. Some good work undone, but still a good week for the Rand. However...
What is on the horizon? That is the question...
The Week Ahead (26-30 August 2016)
We start the week with the Rand trading in the mid-13.60s to the Dollar, mid-15.30s to the Euro and mid-17.60s to the Pound...
We have nothing short of a huge week ahead. There are a lot of big events and there is a lot of eyes watching the Rand very, very closely. Expect the unexpected...
We may see a turning point this week as to where we are going for the coming weeks and months, as we are at a critical juncture at this time. Our premium subscribers are up to date with:
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As we said before, we are due for a few big economic events, and I would advise all those with access to our Rand Fundamental Events to not take an eye off of them.
South Africa is still a ticking time bomb. And you cannot afford to be caught on the wrong side...
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