Forex Commentary 11th March 2009

Gut Feeling

The volatility of the ZAR and which direction to go, is still playing havoc with the market. Another big factor in the ZAR weakening is the huge trade deficit. The trading range once again for the ZAR seems to be 9.75 to 10.65. It looks likely that the ZAR will resist higher levels on the divergence signal and could go as low as 10.2000, before a move higher to 10.8000. Current levels are more or less in line with our partner currencies. Equity markets are still looking at a weaker ZAR but with the market and various emerging markets strengthening, the ZAR looks to break the 10.2000 level. Gold over the next few months will look to replace the US$ as a safe haven commodity/currency. The market must be rather long of US$ and some profit taking has to be taken, so look for a correction of the ZAR back to the 10.1500 level. Risk aversion is certainly going to be around, although pretty quiet at present do no discount it, while all this turmoil prevails in the markets. There is very little data out this week and expect the market to be quiet.

Data Releases

Thursday          SA mining sales and production, Manufacturing

Rates

USD / ZAR       10.3000/10.3500

EUR / ZAR       13.0830/13.1030

GBP / ZAR       14.1450/14.1650

ZAR / JPY       9.4890/9.5090

EUR / USD      1.2644/1.2654

GBP / USD      1.3695/1.3705

USD / JPY       98.35/98.45

Morning Commentary