Forex Morning Commentary 20th January 2009

Gut Feeling

Apologies for lack of report, due to technical glitch. The ZAR has come under pressure as there is no clear direction where it wants to go but on the back of risk aversion and carry trades dragged the ZAR weaker. I still think the level of 10.25 is a psychological barrier and needs to be broken decisively for any further ZAR weakness. I must also say that I am not looking for a huge correction and think today will be a very quiet trading day with the President Elects inauguration day taking front seat. 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 and the debacle sitting on our borders, with no settlement agreement in Zimbabwe. The trading range once again for the ZAR seems to be 9.75 to 10.40. 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

Tuesday            US President Inauguration

Wednesday       SA Retail Sales

Thursday          US Housing Starts, Jobless Claims

Rates

USD / ZAR       10.1520/10.1920

EUR / ZAR       13.2214/13.2412

GBP / ZAR       14.4614/14.4914

ZAR / JPY       8.8640/8.8940

EUR / USD      1.2978/1.2988

GBP / USD      1.4186/1.4196

USD / JPY       90.47/90.57

Morning Commentary