Forex Morning Commentary 22nd January 2009

Forex

Gut Feeling

The ZAR has reacted and held up well despite a strong US$ and has slipped below the level of 10.00 and there is still no clear direction 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. 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.It is still a bit premature to turn positive on the ZAR as there is still a lot of uncertainty in the global market and risk aversion will show its head ultimately at the expense of the emerging markets.

Data Releases

Thursday          US Housing Starts, Jobless Claims

Rates

USD / ZAR       9.9500/10.000

EUR / ZAR       12.9550/13.0050

GBP / ZAR       13.8010/13.8220

ZAR / JPY       8.9420/8.9720

EUR / USD      1.3005/1.3015

GBP / USD      1.3859/1.3869

USD / JPY       89.28/89.38

Morning Commentary