Forex Morning Commentary 18th February 2009

Forex

Gut Feeling

Once again all the news hitting the market is constantly bad and all currencies are taking a hammering. The ZAR is now under extreme pressure and looks likely to trade weaker to the 10.40 levels. The news out of Eastern Europe is causing a new wave of risk aversion as the recession is purported to be more severe than anywhere else due to the large imbalances. The trading range once again for the ZAR seems to be 9.75 to 10.40. I keep stating that the market would reverse its position and I see the ZAR back above 10.00. Market must exercise caution, as the market seems to be clueless on what to do. Keep an eye on Gold over the next few months as a safe haven commodity. Gold has certainly kept its sheen with all the turmoil in the market and I see the gold price above US $ 1000.00. Importers should have done their covering on a %basis as it looks like all emerging markets will be under extreme pressure form here on in. I think if there is no clarity on the stimulus packages, the uncertainty will cause people to look at risk aversion once again and the carry trades will start to be executed at the expense of the emerging markets.

Data Releases

Wednesday        US Housing Starts, Import Prices, Industrial Prod

Thursday           US Jobless claims, PPI,

Friday               US CPI, Real Earnings

Rates

USD / ZAR       10.1430/10.2430

EUR / ZAR       12.7958/12.8558

GBP / ZAR       14.4578/14.4978

ZAR / JPY       9.0169/9.0369

EUR / USD      1.2608/1.2618

GBP / USD      1.4253/1.4263

USD / JPY       92.36/92.46

Morning Commentary