Forex Morning Commentary 13th February 2009

Forex

Gut Feeling

The ZAR had tried to break through the 10.23 level but once again there is a lot of resistance there and eventually strengthened back through the 10.00. I still think the level of 9.85 is bottomish and I expect the market to look at taking some profit initially and force ZAR back to 10.00 level. 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. Importers should also start looking at % covering, as there is a lot of bad news out in the market. I keep stating that the market would reverse it position of strength and looks like it has happened and I see the ZAR back above 10.00.The weakening of the ZAR was on the back of expected Fitch Rating to be worse after the budget speech. The market had concerns that doubling of government debt and a widening budget deficit would have adverse effect on the economy. This was later quelled when the rating agency stated that the budget would adversely affect the SA economy. Market must exercise caution as I expect the market to be very volatile. I think with all the negativity around we must watch out for the dreaded risk aversion and carry trades, start to play havoc with emerging markets again. Keep an eye on Gold over the next few months as a safe haven commodity. Importers should start to look at covering on a % basis their proceeds and not miss the levels below 10.00

Data Releases

Rates

USD / ZAR       9.9385/9.9685

EUR / ZAR       12.8435/12.8935

GBP / ZAR       14.2872/14.3072

ZAR / JPY       9.1055/9.1155

EUR / USD      1.2915/1.2925

GBP / USD      1.4380/1.4390

USD / JPY       91.02/91.12

Morning Commentary