Forex Morning Commentary 16th January 2009

Gut Feeling

Once again as I said yesterday and true to my report as it reached the levels of 10.23 it ran out of steam and corrected back to below the 10.00 levels. I must also say that I am not looking for a huge correction and think today will be a very choppy trading day, where the market will try and take it to weaker levels. If the ZAR struggles to go weaker the long position will be reversed taking the ZAR back to the 9.75 level. 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. A rate cut of 50 basis points by the ECU was done yesterday causing the market to come very volatile as the market is looking to see whose economies are worse of the EUR or the USD. The market is now looking at interest rate cuts as good for currencies/countries as the will stimulate the economies. Exporters should be converting a certain percentage of their proceeds

Data Releases

Friday               US CPI. Industrial Production

Rates

USD / ZAR       9.9085/9.9285

EUR / ZAR       13.1385/13.1585

GBP / ZAR       14.7180/14.7580

ZAR / JPY       9.1080/9.1180

EUR / USD      1.3258/1.3268

GBP / USD      1.4856/1.4866

USD / JPY       90.26/90.36

Morning Commentary