Forex Morning Commentary 21st January 2009

Forex

Gut Feeling

The ZAR has come under pressure yesterday on the back of a strong USD and there is still no clear direction of where it wants to go. The YEN has broken below the 90.00 levels, which has affected the ZAR on the back of risk aversion and carry trades. I till think the level of 10.25 is a physcological barrier and needs to be broken decisively for any further ZAR weaknesses. The ZAR broke through the 10.25 levels but was short lived yesterday and retraced it move back through the 10.25 levels. I must also say that I am not looking for a huge correction and think today the ZAR will remain under pressure. 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. Exporters should be converting a certain percentage of their proceeds.

Data Releases

Wednesday       SA Retail Sales

Thursday          US Housing Starts, Jobless Claims

Rates

USD / ZAR       10.2250/10.2650

EUR / ZAR       13.2420/13.2820

GBP / ZAR       14.2150/14.2550

ZAR / JPY       8.7540/8.7940

EUR / USD      1.2928/1.2938

GBP / USD      1.3919/1.3929

USD / JPY       89.77/89.87

Morning Commentary