Brexit fears continue to dominate foreign exchange flows

Gold and mining production have fallen, which is to be expected. The ZAR has been trading in an average range of 18.75 – 18.25 against the Pound. We are now sitting in the 18.50 region. Many of these foreign exchange flows arise from Brexit headlines.

In the US, we had the mid-term elections where the Republicans lost control of the house. This resulted in USD strength as soon as there was a known result. This USD strength has continued into the new week, which has pushed it into one of the best performers against the ZAR. Although one would expect the rate to be more in the 15 region, we have been in the mid-to-low 14s against the greenback.

On the local front, it seems the markets aren’t phased by political events anymore, as new headlines from the local markets don’t move the ZAR all that much.

Brexit headlines dominate the foreign exchange markets, as the UK seeks to secure a deal by the end of November. This is the main risk factor that the UK faces in the short term.

 

Date	Data	Effect
Tuesday 13 November	· UK Average Hourly Earnings	· Expected to rise – this is positive to the GBP. We can possibly see the GBP-ZAR move upwards
Wednesday 14 November	· SA Retail Sales · UK CPI Data · EU GDP Data	· Expected to drop, if this does happen, we can see this as ZAR negative · UK CPI is expected to rise, this will be supportive of the GBP and  a ZAR-negative · EU GDP is expected to remain stable, any deviation will result in foreign exchange volatility
Thursday 15 November	· US Retail sales	· It is expected to increase, this will be USD positive and ZAR weakness can be anticipated
Friday 16 November	· EU CPI	· Expected to come in line with expectations – any deviations will result in EUR volatility

– Sebastian Steyn