Forex Morning Commentary 15th January 2009

Gut Feeling

Even though the ZAR has weakened overnight I still think that as it reaches the levels of 10.23 it seems to run out of steam as the days go by due to Export proceeds being exchanged and my feeling is still there will be a correction for a stronger ZAR. I must also say that I am not looking for a huge correction, as I believe the ZAR will remain on the back foot, for as long as we have the huge trade deficit.  My feeling is he will cut interest rates by 50 BP, which will assist the ZAR to strengthen. The trading range once again for the ZAR seems to be 9.75 to 10.40. US figures coming out are still declining as are figures from the ECU. A rate cut is imminent in the ECU of 75 bps or more. The market is now looking at interest rate cuts as good for currencies/countries as they will stimulate the economies. The  revival once again of risk aversion has hit all the emerging markets and put pressure on all commodity currencies. Exporters should be converting a certain percentage of their proceeds

Data Releases

Thursday           US Jobless Claims, PPI

Friday               US CPI. Industrial Production

Rates

USD / ZAR       10.1850/10.2350

EUR / ZAR       13.4420/13.5420

GBP / ZAR       14.9050/14.9550

ZAR / JPY       8.7070/8.7370

EUR / USD      1.3183/1.3193

GBP / USD      1.4617/1.4627

USD / JPY       89.08/89.18

Morning Commentary