Forex Morning Commentary 04th February 2009

Forex

Gut Feeling

The market is certainly jig sawing around but it still seems that 10.23 is a tough nut to break and the ZAR shows some good resilience in the face of external pressures. I still think the level of 9.85 is bottomish and I expect the ZAR to make a move to the 10.40 levels once the lower levels have been reached. 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. There is lots of data this week both for SA and the USA, which will show some sort of direction for the currencies. A lot of the ZAR market expectations of what is to happen, is basing its move on the Interest hike together with the SA elections. This will give a clearer picture of the way forward. Is this Trevor Manuel’s last budget speech I ask? What are the prospects for the ANC in these elections? Influencing factors over next few months.

We will limit the market report to Monday, Wednesday and Fridays as the market movements are far too repetitive and once it changes we will revert to the weekly report.

Data Releases

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       9.9925/10.0225

EUR / ZAR       13.0439/13.0839

GBP / ZAR       14.4299/14.4899

ZAR / JPY       8.9400/8.9900

EUR / USD      1.3050/1.3060

GBP / USD      1.4438/1.4448

USD / JPY       89.55/89.65

Morning Commentary