Welcome to our latest Weekly Rand Review...
What a week it's been! The Rand actually strengthened against the Dollar by a solid 0.97%...despite Trump dropping tariff bombs (and 'falling out' with Elon Musk)...
...and then US Non Farm Payrolls surprising to the upside.
Let's give you some of the lowdown.
Market Pulse 📊
The Rand defied gravity this week, strengthening nearly 1% against the Dollar while global markets had a proper meltdown over trade wars. Sometimes this currency just loves to keep us guessing...and the economists scratching their heads.
- Price Action: R17.94→R17.76 – Daily swings averaging 14.3 cents
- Technical Setup: Support building at R17.68, resistance capped at R17.98
- Momentum: Steady strengthening trend with mid-week acceleration
- Risk Events: Trump tariff bombs, ECB rate cuts, OECD survey release
- Correlated Moves: Gold surging above $3,400, Bitcoin consolidating at $105k
Monday opened with the Rand at R17.94/$ and immediately you could sense something was brewing. The pair pushed to a weekly high of R17.98 early in the session...
...but Asian flows brought steady selling pressure that pushed us back down to close at R17.81/$.
A decent move to start the week – while offshore accounts were busy repositioning after the previous week's moves.
Tuesday brought more of the same, with the Rand opening around the R17.81 level, and weakening to hit R17.94 before reversing.
Trump announced his 50% tariffs on EU imports (later delayed)...which should have sent the Dollar screaming higher, but instead, the Rand managed to claw back some lost ground to close around R17.84/$...
Midweek saw the Rand thrust below R17.80 a couple of times before closing just above this level in another day of Rand strength, as traders eyed the rest of the week big events - as well as the next market-moving news out of the US.
And in other news...
Trump's Tariff Theatre: The US President announced 50% tariffs on EU imports (later delayed to July), increased steel and aluminium tariffs to 50%, and generally reminded markets why trade wars are called wars - with the biggest one, China, seemingly coming to the table to negotiate.
The fact is that there has been a silent war that the US has been losing for decades (with trading partners taking advantage of minimal US tariffs but piling them on for US exports). It has needed some bold action to reverse this crippling trend...
Trump/Musk Fallout: The week was marked by a very public spat between the President and Elon, sparking from Elon Musk publicly criticizing Trump's 'Big Beautiful Bill', calling it an 'abomination', which quickly escalated into a public online spat and eventual fallout...
...coming shortly after Elon's tenure at DOGE coming to an end, one has to question whether this was political maneuvering (kayfabe?) or for real...
...either way, it seems Musk close public involvement with Trump has come to an end, at least for now. Another 4D chess move?
ECB Policy Divergence: Christine Lagarde's central bank delivered the expected 25bp cut, bringing rates to 2.25%. The move was so telegraphed that even the doves were calling it "obvious"...which is fascinating given how wrong they were about timing just months ago.
Gold Hits $3400 Again: After hitting $3120 an ounce in May, the precious metal has since climbed and managed to push briefly above $3400 this week – in line with our forecasts - we will be watching this one closely...
...as well as Bitcoin which seems to be waking up again after its recent test of the $100k level.
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Getting back to the Rand...
Thursday saw the European Central Bank cut rates by 25bp to 2.25%...which everyone and their grandmother saw coming. Yet somehow this "predictable" move sent the Rand to its best level of the week at R17.68/$...
...sometimes central bankers just love to remind markets that obvious doesn't mean easy to trade.
Friday dawned with the Rand holding near weekly lows below R17.70/$...
...but month-end flows brought some modest Dollar buying that pushed us higher ahead of US Non-Farm Payrolls announcement, which when it came, turned out to be not much of a trigger for a move...
...with 139,000 jobs being added (higher than expected) but less than hoped for, while unemployment remained unchanged at 4.2%.
The rand weakened to test R17.80 but then managed to recover in later trade to hold out for the week a few cents lower.
So, how did we do?
Volatility & Risk Analysis
The Rand had a good week, overall, gaining almost a percent while managing to fight off any serious challenges by the greenback. But this didn't mean it was all one-way traffic, as these ranges show:
Avg Daily Range: 14.3cents (0.8%) – R143,000 per $1m USD position
Weekly Range: 30.1 cents (1.7%) – R301,000 per $1m USD position
Which is a good time to put this clearly across:
Whether you trade spot or take forward cover...
...you CANNOT eliminate your risk.
But you can manage it with an objective dynamic hedging policy!"
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- and how to use this to advantage?
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The Week Ahead
This week brings a relatively light South African economic calendar...which means all eyes turn to US data and whatever fresh tariff threats emerge from Trump's social media feed. Technically, we've established strong support at the R17.68 weekly low...
...though there remains the chance of a test slightly lower. The Dollar has been taking some pain the past few weeks, but is likely to be close to a reversal of fortunes.
Expect the unexpected....not a time to be trading by the seat of your pants.
To get a look at the latest forecasts, use the link below:
Click here to view the latest forecasts
If you have any questions or feedback, please leave them below.
To your success~
James Paynter
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