Forex Morning Commentary 06th February 2009

Forex

Gut Feeling

The market has accepted the 100 basis points cut as assistance to households and the business sector. 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 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 Influencing factors over next few months.

Data Releases

Friday               SA Reserves, Pres Motalanthe State of the Nation Speech

Friday               US Non Farm Payrolls, Unemployment                                             

Rates

USD / ZAR       9.8400/9.8800

EUR / ZAR       12.5785/12.5885

GBP / ZAR       14.3871/14.4071

ZAR / JPY       9.1459/9.1559

EUR / USD      1.2782/1.2792

GBP / USD      1.4623/1.4633

USD / JPY       90.91/91.01

Morning Commentary