Welcome to our Weekly Rand Review for 25 July 2016, where we take a look at how things unfolded last week and give you our thoughts for the week ahead.
The Rand continued a more gentle trend which has been seen in recent weeks, as it more or less ended the week where it started. It did, however, cross a few important hurdles. Let us take a look at how the events unfolded...
How It Happened (18-22 July 2016)
After some swift movements late on the previous Friday night (15 July), due to Turkey's coup d'etat attempt, the Rand was seen to weaken significantly. However, when the markets opened on Monday, we had already gained back all which had been lost, and then some more by the time business hours began, by which time the Rand was trading at 14.32 to the Dollar.
Our outlook showed it to continue along that route, but with a bottom out due shortly (see below - click to enlarge)
Click to enlarge
And the Rand most certainly did do that! It fired away in fantastic fashion, almost reaching 14.20 to the Dollar by the close of Monday. A very vast move from where we had been late on Friday night, with about a 40c void being covered.
This movement on Monday took it right into our target area, with a retracement now being expected in the following days.
Tuesday gave us our forecasted movement with the Rand weakening significantly. By the time we reached closure of business, a large amount of Monday's gain had been lost, as the markets proceeded toward higher levels.
A high of 14.45 was reached late on Tuesday afternoon.
It was put down to IMF Growth concerns. This move was an unexpected one in most of the nation's eyes. After bouncing back so quickly from Turkey's coup, most expected a continued strengthening below 14...
...but such is not the case with the markets, as you simply cannot say where they are going based on events.
A probability of just 10% that the SA Reserve Bank (SARB) would hike the repo rate on Thursday provided some good news for locals - but not for foreigners looking for returns.
This resulted in minimal movement between midday on Wednesday, to midday on Thursday, as the Rand bunched its candles together.
Thursday's Short Term Outlook (see below - click to enlarge), confirmed this uncertainty in the market, with the sentiment patterns indicating the market was about to bottom out or had done so already...
The Rand continued to meander along toward the 15h00 mark when the MPC statement would be made. As Governor Kganyago confirmed that SARB would not be increasing the interest rate. sharp, quick movements saw it punch above 14.30 and then shortly afterwards drop down to 14.16.
The end of the day left the Rand as only gaining 10c in the day, despite the strong moves in the late afternoon.
Friday dawned and initially there was some further strengthening of the Rand, which must have made some people wonder if it was going below 14...
...however, such was not the case.
After a low of 14.16 to the Dollar was touched mid-morning on Friday, the Rand turned on its heels and shot upwards! It continued on this trend for the remainder of the day, eventually finishing after business hours just below R14.40/$.
This validated our forecast exactly, as it had gone right into our target area before beginning its retracement. If you are one of our subscribers, you would have been expecting this move... If you are not, you would have been left in the dark...
The Week Ahead (25-29 July 2016)
With Municipal elections fast approaching, there are some very important days and weeks ahead. And with some important data releases both locally and internationally, expect a bumpy ride this week.
The week ahead sees the Rand needing a clear break above certain levels before it can be confirmed as a change of the short-term trend.
These levels are set out clearly in our forecast for Monday the 25th, giving our subscribers that extra edge in managing their forex exposure.
For those of you who are not subscribed to our forecasts already, if you have any Forex involvement you need to have a game plan. Otherwise you are taking pot shots in the dark. If you have not already, get subscribed to our free trial today, to see what a difference and saving we can make.
As always, I would love to hear your comments and feedback - please leave a comment below.
To your success~