1st Contact Forex

The Rand remains on the up

This past week we saw the ZAR continue to gain against all major currencies. Contrary to many people’s expectations, the 2017 Budget Speech added further momentum to the Rand rally, even though it didn’t provide much good news for South Africans.

1st Contact Forex

The Rand broke through the 13.00 to the US Dollar threshold, charging to 12.78 USD – ZAR later in the week. The local currency has since come off those highs and is, at the time of writing this report, a few cents above 13.00.

Last week’s Rand movements were largely as a result of the US market. President’s Day in the US meant that Monday was a slow day for trading, after which the week was filled with data releases. This included US unemployment data, which came in higher than expected after President Donald Trump’s speech on Friday.

In the UK, Governor Carney’s speech and GDP Growth rate data were the major economy movers, but neither did much to affect the market.

It is likely to be a fairly volatile week, with some big data releases due both locally and in the US. Furthermore, politics will once again take centre stage, with murmurs of a cabinet reshuffle by Jacob Zuma giving South African investors jitters.

At the time of this report (10:11 am), markets are trading at 13.0165 USD – ZAR, 16.1592 GBP – ZAR and 13.7752 EUR – ZAR.

What do look out for this week:

Day What’s happening? Why it’s important
Tuedsay GDP price index (US) An increase in US GDP could be bad for SA exporters to Japan; thus weakening the ZAR.
Wednesday Trump’s speech to Congress and ISM manufacturing data It is Trump first speech to Congress.

The manufacturing index shows business conditions in the US manufacturing sector. It is a significant indicator of the overall economic condition in US, expectations are bullish.

Thursday EUR consumer price index The core CPI is a key indicator to measure inflation and changes in purchasing trends.
Friday Yellen’s speech It will likely give us an indication as to whether the US will raise interest rates in March or not.

– Chris Williams

1st Contact Forex