Well, well...what a week!
All eyes globally were on the US - but locally, all eyes were too on the Rand!
We are well and truly into the end of year helter-skelter in global markets, and this was made even more so by the US election, as we saw volatility aplenty.
But what a turn of fortune for the Rand, as we saw a break to levels not seen since the pandemic began!
March was when everything really went pear-shaped - we were now breaking back to the best level seen since early March, as the USDZAR hit R15.69 late on Thursday, and further yet on Friday.
It was a week of tumult, as the election results remained up in the air...
...with mountains of legal challenges coming from the Trump campaign amidst accusations of widespread voter fraud across multiple critical US states.
This show is not over, folks…so standby!
But first, let's get into the full review...
There were a number of big talking points over the week, but none really bigger than the US election - so that is where we will keep our focus.
There is so much to cover:
- The pollsters got it wrong...AGAIN!
- Delayed results holding the world in suspense - what is going on?
- Voter fraud - is it really happening or not? Evidence has to be brought, but there is a mounting of proof which is starting to suggest it is real...
- Markets reactions as the varying fortunes played out...
And where else to start but with the polls…
Almost every news agency and polling station had Biden at a huge lead - talks of a "blue democratic wave" sweeping across the country, both for the Presidency and different positions in Congress.
But this was seen at all in the early vote counts on Tuesday, as Trump kept pace with Biden across most states, running a close race.
So the pollsters were wrong, as 2016 failures seemed to be happening all over again.
What is it about these polls? Ever since Brexit, it appears that no major polling station has been able to get it right!
Whatever the case, a massive Democratic underperformance has meant that they have not achieved the wins they had hoped for - with power to make some of the massive socialist changes they wanted, largely out of their hands.
And then, despite Trump and Biden both indicating they had won during the course of Wednesday, this race was far from over.
So it dragged over into Wednesday...
...and then Thursday
...and then Friday
With no clear end in view.
Election results were coming out at a snail's pace, and uncertainty and concern abounded.
By Thursday most media stations were showing Biden had 264 electoral votes and Trump at 214 (while others claimed Trump was not out of the running in Arizona). Without Arizona, Trump would need to "sweep the table" and take Nevada, Alaska, North Carolina, Georgia and Pennsylvania. He held leads in 4 of these 5 states, but the differences were razor-thin, with the whole race on a knife-edge.
For Biden, he would just need one of these states to secure his win.
However, it was not that simple, as legal cases began to come in thick and fast from the Trump campaign, with different allegations:
- Improper conduct by election officials, not allowing voting to be monitored
- Votes being accepted by persons who did not live in the state
- Persons who were either dead or not illegible to vote having their ballots mysteriously counted
- Secret dumps of illegal votes being brought to voting stations overnight and counted
- Post Office breaking the election rules by processing votes after cut off times
...and much much more.
The challenges mounted up across the country as the Trump campaign went into full attack mode.
It will be a question of whether the proof is there for the allegations, but a few sources we have independently looked through, certainly suggest there is merit for these claims.
So don't expect this to be over today…or maybe not even this week.
Who really knows...but things are just getting started.
What would an event in 2020 be without a whole lot of uncertainty around it?
But now to look at the markets, as we saw varying fortunes playing out over the days following the election.
The Rand turned on its head over the next few days as we saw massive swings in value:
This was as the Dollar suffered, with the Dollar Index against a basket of currencies crashing lower toward 92 once again:
The election was the main focus, but also not the only news of the week as we saw some other important headlines:
- In China, production figures rose for the sixth consecutive month which sees the second fastest growth rate in the sector for over a decade - proving that the recovery is in motion.
- And the on the subject of recoveries, the US continued to bounce back with jobless rate falling to 6.9%, with payrolls increasing by 638,000, better than the expected 530,000 and unemployment rate of 7.7%.
- But then across the pond, the UK started a new four-week lockdown as all non-essential shops, pubs and gyms close. This comes after the country recorded the highest daily deaths figure since May.
- Locally, SA consumers are struggling to start paying their premiums again after the pause that many banks and companies put on payments during the lockdown. Just 36% of those who t
ook payment holidays are now paying their premiums again at Liberty insurance group. One would expect to see similar trends across credit cards etc…worrying signs!
And as we drifted into Friday, the election map started to come clearer...
- Biden came from behind and crept into lead in Pennsylvania & Georgia (only needing one or the other to secure victory).
- However, military ballots were still trickling in which would favour Trump
- Lawsuits raged from the Trump campaign on multiple accusations of fraud
- Word in the Biden camp was to prepare for "months" of legal battles
- Georgia will be recounted, and likely other states too...meaning the delay rolls on.
As for the Rand, it continued on it's merry way to break below R15.60s on the last day of the week, after closing at 5PM SA time at R15.74 to the greenback.
What a week it had been...and what more can we expect next week is the question!
The Week Ahead (9-13 November 2020)
This week ahead will give us a chance to breathe following the frantic last few days, but likely election disputes will continue. Here are some of the events ahead of us:
- SA - Unemployment Rate for Q3
- USA - Retail Sales, Jobless Claims
- UK & EU - GDP, Consumer Price Index
Don't expect these to be the only talking points, because as we look to the days ahead, you can hardly look further than the US election.
What will come of the court cases?
Will the recounts change the playing field?
Nobody quite knows, just yet...so we will watch and see.
As for the Rand, expect plenty volatility once again. We will keep looking at our Elliott Wave based forecasting system to give us some clues, with some key levels that we will be watching to confirm the larger degree trends.
Another interesting week lies ahead!
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