Forex Morning Commentary 02nd February 2009

Forex

Gut Feeling

The ZAR has comes under pressure over weekend on risk aversion. There is no direction at the moment and will stay volatile for the foreseeable future. I still think the level of 9.85 looks a bit bottomish and I expect the ZAR to make a move to the 10.40 levels. The trading range once again for the ZAR seems to be 9.75 to 10.40. It is still a bit premature to turn positive on the ZAR, as there is still a lot of uncertainty in the global market. A rate cut is on the cards and market sentiment has changed and looking for a bigger cut of a 100 bp. Any bigger cut would affect the foreigners to look at investing into South Africa, which in turn would assist our trade deficit. A cut contrary to the past of weakening the currency would strengthen as the market interprets it as a stimulus for the economy. Once again exporters should be looking to sell off their proceeds on a percentage basis as the ZAR weakens.

Data Releases

Monday              SA PMI

Monday              US Core PCE, Personal Income, Constr Spending

Tuesday             SA CPI, Vehicle Sales

Wednesday        SA MPC Meeting

Thursday           SA MPC Int Rate Decision

Thursday           US JoblessClaims, Durable Goods, Factory orders

Friday               SA Reserves, Pres Motalanthe State of the Nation Speech

Friday               US Non Farm Payrolls, Unemployment                                             

Rates

USD / ZAR       10.2338/10.2538

EUR / ZAR       13.0174/13.0574

GBP / ZAR       14.6497/14.6697

ZAR / JPY       8.7224/8.8024

EUR / USD      1.2719/1.2729

GBP / USD      1.4311/1.4321

USD / JPY       89.58/89.68

Morning Commentary