Rand gains due to weakness in major currencies

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Tuesday saw the mixed trading of the Rand due to weaker than expected labour data from Britain, and stock market volatility on Wall Street. Higher volatility in major markets such as Wall Street usually has a ripple effect for emerging markets as this erodes risk appetite and the demand for more exotic assets.

The ZAR opened stronger on Wednesday at R14.40 to the USD as the weaker USD drove some strength into the Rand. Further gains were recorded against the Pound, as the ZAR opened at R18.72 against the Sterling and closed at R18.67. Weakness in the Pound was mainly driven by continued uncertainty on Brexit and the lacklustre labour data released on Wednesday.

This trend continued and increased in intensity on Thursday, as the ZAR opened at R18.47 against the Pound and closed at R18.13. Interestingly, the ZAR traded flat on the USD on Thursday. Local politics may have stalled Rand strength as the Home Affairs Minister, Malusi Gigaba resigned.

This trend continued on Friday as the Rand strengthened and opened at R18.17 to the Pound and closed at R18.01, breaking resistance at R18.00. A similar development was observed with the greenback as the R14.00 to the USD level was broken. On Monday (19 November), the ZAR traded mainly flat against both the greenback and the Pound.

Date	What’s happening?	Why does it matter?
Tuesday	British BOE Inflation Report Hearings	Indicative of the medium-term inflation outlook and the long-term strength of the Pound
Wednesday	SA Inflation Data US Durable Goods Data	Higher inflation will devalue the ZAR Indicates the level of spending in the economy and may be USD positive
Thursday	Japan Inflation Data SA Interest Rate Decision EU Consumer Confidence	Higher inflation will be Yen negative Depending on inflation levels, a higher interest rate will be ZAR positive Improved consumer confidence will drive          spending in the medium term and will thus be  EURO positive
Friday	Brazil CPI Data India Forex Reserves Canada Inflation Data	CPI drives inflation and may drive the local currency lower Better forex reserves increase the value of the Rupee in the long-term Higher inflation will be CAD negative

– Justin Fortuin