Relief for consumers, relief for importers - the Rand finally had a solid week.
The amount of volatility being experienced is still less than ideal, but when it is driving the Rand stronger, few are going to be complaining.
While it benefits exporters, it is making imports more expensive and driving up fuel, food and consumer products. It remains to be seen if this last week can bring the shockingly high fuel price down...
With the market failing to break above the psychological level of R14/$, we saw it break lower toward R13.50 on Thursday.
Once again, the talking point was Trade War. Deeper analysis is being done by many media outlets as to the effects on different countries, as we wait for the next move from global leaders.
One thing is sure: it will be the smaller economies with exports who suffer the most.
Anyway, let us get onto reviewing how this last week went...
As always, we did our forecast the Friday prior to the week, with the expected outlook for the next few days, weeks and months ahead. Based on the latest analysis it looked like the Rand had either topped out or was very close to doing so...
...we were just going to have to be patient as the wave patterns played out.
Key moments of the week...
All in all, an extremely successful week for the Rand.
What continues to be pointed out by many economists (and is true, to a certain extent) is that a lot of what happens in the markets is related to the United States, as being one of the economic superpowers. The influence that they have is significant, and the economic events based in the US are of more importance - especially ones like we had this last week: Non-Farm Payrolls and June's Fed discussions.
With markets being moved by emotion, major events like this can provide those triggers for the underlying sentiment. This week, the trigger was for the market to move as anticipated by our forecast from Friday.
What was not anticipated was the substantial increase which we saw in fuel price - which surely should have had a negative on the markets (not so?) - and yet, what we saw was a strengthening Rand...
...and this was despite the Trade War fears
...despite heated Land Issue debates
And so it proves:
Markets defy logic.
This is why we cannot rely on logic or gut-feel to guide us as to market direction.
We learn this with time, and some hard knocks. It is a tough game to play!
Up to Friday, we had already seen a 30+ cent strengthening from the Rand during the course of the week.
But US Non Farm Payrolls is always a trigger for a big move .., and so we were expecting more.
And that was exactly what happened, as we saw a sharp drop of over 12c to close out the day, as the Rand briefly broke below the R13.50/$ mark...
And here is some other news from the week:
And with that, the week closed out, with the Rand a tad over R13.50, heading into the new week...
The Week Ahead (9-12 July 2018)
So, a much better week, and a much better start for the week for once, as the market has tested the 13.30 target level that we had in the above chart.
Question is, can it follow through from here?
The wave structure and strength of market movement over the next days could be crucial in confirming direction for the balance of the year.
And we can be sure of this:
But don't take my word for it - try it out yourself for 14 days free - and tell us what you find yourself.
Until next week...
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