Rand Report: A hold on risk trade sees the rand rally to high levels. Image: AdobeStock

Rand Report: A hold on risk trade sees the rand rally to high levels

The rand enjoyed another favourable week, benefitting from a further bout of USD weakness.

by Sable International

07-09-2021 17:22

in Business & Finance

Rand Report: A hold on risk trade sees the rand rally to high levels. Image: AdobeStock

Along with the majority of emerging markets, the rand overpowered all three of its main developed market currency rivals.

The main highlight from the past week was the US employment data, in the form of nonfarm payrolls. This was a rather disappointing data release, with the number of monthly new jobs dropping to 235,000 from 1,053,000 in the month prior. The signs of weakness in the labour market do not bode well for the US economy. Markets appear wary that this slowdown in job creation might delay the start of asset tapering in the Fed’s bond purchasing programme.

The Pound pushed back against the Dollar last week after the disappointing nonfarm payrolls report led to further weakness in the greenback. GBP/USD moved 0.79% higher, closing off at 1.3865 from an open of 1.3758 on Monday.

The USD/ZAR pair depreciated by 2.76% throughout the course of last week’s trade. After opening at R14.74 on Monday, the pair closed off above the R14.30 support level. Similar movements can be observed against both the Pound and the Euro, with GBP/ZAR and EUR/ZAR depreciating by 2.00% and 2.03%, respectively. At the close of trade on Friday, the rand held steady at R19.84 against the Pound and R17.00 against the Euro.

South Africa’s GDP growth rate for Q2 of 2021 is due today. On Thursday, we will hear more about the country’s Q2 current account balance, as well as business confidence for Q3. Manufacturing production for July will also come due.

With little on the horizon in the form of global data releases, most currency movements are likely to stem from further Covid developments and the revitalisation of the global economy. This week, it appears that sentiment is beginning to turn, with stochastic indicators suggesting that the Dollar has entered into oversold territory.