A rummy old week for the Rand as we saw the market tracking sideways for the most part, making for a very boring week when it came to market movement ... before we saw a shimmy at the end!
However, on the global stage, there was plenty of news and events to keep us interested.
From Trade War's, to Brexit's and much more.
And one can be assured that the Rand will not be in this holding pattern for much longer...
...so as we take a look at our week's review, maybe we can get some pointers for the week ahead.
(although the real pointers are in our Elliott Wave Forecasts - take a look at a Free Trial of our Rand Predictions here)
As the week unfolded, there were some big headlines during the 5 days:
- Trade War - after disappointment after disappointment, we finally had something in concrete: Trade War Deal Phase 1
- SA Interest Rates - a surprise action from SARB on Thursday made for some interesting discussion...
- Eskom, SAA & SARB - all in the news for various reasons, with many difficult questions being posed as to their operation.
- Brexit deadline - all eyes are on the deadline to see what the literal and practical effects are going to be, as so much remains unknown
- #JunkStatus - is it a reality for this February or is it not...?
The market opened around R14.31, with a lot of anticipation in view of the 15th of January: D-Day for the Trade War.
Trump had touted this date as the time when it all comes together for the US, getting their "greatest ever" trade deal in place. In reality, it was only a small portion of the list of issues which needed to be resolved between the US & China. But analysts still put the deal as a victory for the US, even if it wasn't the full package...yet.
In anticipation, the US removed China from their list of "Currency Manipulators" and the Yuan pulled back some ground on this news.
And then, as promised, on Wednesday, we got our first look at Trump and the Chinese on stage announcing the signing.
This included a promise from China to purchase $200 billion worth of US goods:
Economists had been waiting for this moment for 18 months of debates, and talking it up into being absolutely crucial to the Dollar and Rand...
…so guess what happened?
The ZAR had a minor blip stronger, but then that was that. The rest of the week it traded sideways until late on Friday.
A classic case of "Buy the rumour, sell the fact"?
Or just another proof that we cannot look toward events to give us market direction?
Perhaps a bit of both.
Either way, the economists were left looking for answers, once again.
Meanwhile, in other mostly local news:
- Eskom continues to be a thorn in SA's flesh with more load shedding this last week - however, it did appear that things were getting under control come the weekend. It has been a torrid start to the year, with the chairman Jabu Mabuza resigning on Friday after failing to deliver his pledge to keep the lights on during the holiday period. Now in comes Andre De Ruyter as CEO, with a whole lot on his hands to turn around. But it was some bright spark at least, that there was at least a man at the wheel of the ship to try steer it away from disaster...now to see if he can do just that.
- On Thursday, SARB was due to make a decision on interest rates again, with all expectations for months in advance being that there would be no change to the rates. However, come Thursday, a surprise decision from them saw rates cut by 25bps. Yet, once again, the Rand did not have much of a reaction.
- SAA was in the headlines again for the wrong reasons, as it announced it was going to be selling some of its aircraft...but nothing to do with business rescue, according to officials, but rather to "accommodate a new fleet"! It is hard to believe that this bottomless black hole for cash is still running, let alone purchasing a new fleet!
- And then it was SARB, who clearly was still under pressure to be nationalized… Tito Mboweni, Finance Minister, made his thoughts abundantly clear as to what he thought of this idea, and invited critics of his thoughts to "burn me at the stake". He repeatedly questioned what the ANC is looking to achieve by this - this is a completely valid question, as SARB is functioning just fine!
- Which brings us to the next point: Moody's decision on SA's investment rating. It would be one thing if SAA, Eskom and South Africa's economy were in the shape that they are, and there was absolute clarity as to how the ANC was going to turn things around...but there is no clarity. Not one scrap. Policy is uncertain, ecomonists are uncertain, and even Tito Mboweni in the position of Finance Minister is frustrated at the situation. The risks of this coming about in February are very very real, and this will certainly be the biggest decision Moody's has had to make since the talk of #JunkStatus begun 3 years ago.
- Meanwhile, over in Britain, they were fighting their own wars, as the time ticked toward the Brexit deadline of 31 January. The cost of Brexit has already been an incredible R2.4 trillion in ZAR terms, and the full extent is yet to be seen as the next few weeks unravel. What a time it has been for Britain...it will be interesting to see what the next few months have in store for them.
On Friday we saw the market open around 14.41 and after initial dropping to 14.35, it the turned around and edged higher during the afternoon to 14.50 before closing around 14.45.
So, a quiet week comes to an end - and although likely not to continue for much longer (the Rand is its own kind of beast!), the market has found some stability over these 5 days.
And that was the wrap!
The Week Ahead (20-24 Jan 2020)
As we head into the third week of the month, what is in store for us?
Not much on the local front, apart from SAA/Eskom situation and #Junkstatus debates.
Not a whole lot happening with economic data releases on the global front either, with ECB interest rate decision likely to be the one to watch.
But, of course, there is the countdown to Brexit, the implications of the US-China deal, and the Impeachment process in the Senate:
Where does this leave the Rand?
As usual, we will be seeing what the Elliott Wave patterns are telling us, not the news. From a technical perspective, the market has been close to testing key levels and it will be interesting to see how the next few days play out.
To get a look at what we are speaking about, use the link below to get 14 days free access to our latest forecasts - update bi-weekly.
(You don't want to regret not having done so this time next week...)
Look forward to hearing from you.
To your success~