Forex

Gut Feeling

Well risk aversion is the flavor again and it has affected all emerging markets. Another big factor in the ZAR weakening on Friday was the huge trade deficit. The trading range once again for the ZAR seems to be 9.75 to 10.40. Market must exercise caution, as there is a lack of direction both ways. Keep an eye on Gold over the next few months as a safe haven commodity. This will happen but for now I see the ZAR a bit weaker. I like to stay long of US$ below 10.0000 and sell US$ over the 10.20 level. A market consensus has shown that before year end they looking for a 350 basis point cut. My prediction is that the ZAR will once again need to break through the 10,23 level decisively and if so 10.40 is on the cards. Friday keep a watch out at trade figures. There has to be a correction as the ZAR weakened against it partners in the emerging markets e.g. AUD and TRY and hence the market is a bit long of US$ and exporters should take advantage of the weak ZAR and sell their proceeds.

Data Releases

Tuesday            SA Vehicle Sales,

Thursday           US Jobless Claims, Factory Orders,

Thursday           UK and ECB Rate Cut

Friday               SA RESERVES    

Friday               US Non Farm Payrolls

Rates

USD / ZAR       10.4060/10.4560

EUR / ZAR       13.1585/13.9085

GBP / ZAR       14.7185/14.7585

ZAR / JPY       9.3575/9.4075

EUR / USD      1.2637/1.2937

GBP / USD      1.4118/1.4128

USD / JPY       97.57/97.67

Morning Commentary