Forex Morning Commentary 27th February 2009

Forex

Gut Feeling

The market is proving very erratic and is moving on its own and not following any set correlations. One-minute risk aversion is the buzzword then is not, so all in a very difficult market. The market was very long of US$ and a correction happened taking ZAR to 9.8500 level. The trading range once again for the ZAR seems to be 9.75 to 10.40. Market must exercise caution, as the volatility is causing traders lots of anxiety, as there is a lack of direction both ways. 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 although it has come back somewhat on risk aversion sentiment dwindling. Importers should relook at their covering on a % basis when ZAR breaches the 10.00 level. I like to stay long of US$ below 10.0000 and sell US $ over the 10.20 level. I think as the market unravels all the bad data both in USA and Europe - risk aversion will play a major part in the weakening of emerging market currencies. Tito Mboweni dampened an early rate cut at a seminar he held, by saying that at present there is no need for an emergency meeting of the MPC. I think that it should not be discounted and there is a possibility of this meeting taking place before April, which is the date set for the meeting. A market consensus has shown that before year end they looking for a 350 basis point cut?.

Data Releases

Friday               SA M3, PSCEy/y, Trade Stats

Friday               US GDP, NAPM

Rates

USD / ZAR       9.9690/10.0690

EUR / ZAR       12.6550/12.7550

GBP / ZAR       14.1890/14.2190

ZAR / JPY       9.8228/9.8428

EUR / USD      1.2705/1.2715

GBP / USD      1.4253/1.4263

USD / JPY       97.87/97.97

Morning Commentary