Forex Commentary 13th March 2009

Gut Feeling

The volatility of the ZAR is still playing havoc with the market. The ZAR earlier in the week tested levels of 10.6500 and overnight broke through the 10.0000 levels. 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. 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 through the 10.000 level. Risk aversion at present is very quiet but I think one must exercise caution and not get caught to short as it always rears its head unexpectedly. There is very little data out this week and expect the market to be quiet. After the poor manufacturing figures of yesterday surely it is now prudent for the Gov of the SARB to look at a rate cut before April.

Data Releases

Rates

USD / ZAR       9.9500/10.000

EUR / ZAR       12.8713/12.9013

GBP / ZAR       13.8550/13.9050

ZAR / JPY       9.7677/9.8077

EUR / USD      1.2914/1.2924

GBP / USD      1.3908/1.3918

USD / JPY       98.03/98.13

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