FXOne would like to thank Warrick Butler from Standard Bank for his valued contribution to the dose this morning. Dogs can’t operate MRI machines. But catscan. Current USDZAR level: 16.7700/16.7800 Rand range yesterday: 16.7000-17.0900 and NY close: 16.7550 The end of what has been a long and schizophrenic week, is upon us and I think there isn’t a single person unhappy to see the back of it. As many of you know, this is not my first rodeo and I have one overriding view from my experiences over the past couple of weeks. Either the market is lacking in experience or the AI build algo models are starting to dominate. The short-term realised volatility in certain markets is off the charts with commodities and equities the two stand-out asset classes. There is either very little appetite to hold inventory and it seems its just quote wide and cover instantly at all costs. These headline-driven system funds are not helping the cause either given headlines have also been messy. Speaking of which, the reported possible rift between Israel and the US could be a blessing for all the innocents. At the end of the day the only winners in a war are the one with the defence contracts and with the US spending upwards of $17 bio a day on this, that is some serious winnings (if you think he with the most money wins at the end of the day). Maybe markets have recovered a little overnight in the hope that Trump can save face by using the strike on the Iran gas field, and Israel talking about ground mobility as a way to extricate the US from what could easily become a never-ending story aaah uhh aaah uhh aaaah uhh. Just no big likeable dog in all of this. Oil has managed to pull itself back from the brink and now we potentially have a double top in place (short-term that is). The reality unfortunately is that whilst it remains above $85/barrel, the impact on inflation in net importer markets is going to hit hard, above $100/barrel and a hit to economic growth starts creeping in. The war is only a few weeks in and so there is a very small chance this is not the case, but a clear head will understand that there is a greater chance we carry on in a horrible situation for a lot longer still. Equities needed a correction from what has been an insane bull run/trend and there is still further room for stocks to reprice. With that in mind and given the size on Trumps ego is only comparable to the entire debt of the USA, there is only a small chance that he pulls the world back from the brink and so it remains prudent to remain risk averse. The Rand has been the standout performer during all of this, well if you exclude China, who by the way seem to have stuck their nose in front of the flight to safety. Back in the day, the Rand would have been above at least 19 at this stage, however with the structural changes in our financial system, the Rattler is a little more robust these days. There is a caveat to this, however. As long as oil remains elevated and commodities unwanted, the terms of trade in SA will start taking a hit and this will impact the currency eventually. So, I remain in buy-the-dip bias. Only a cease-fire will likely see the Rand back to the low 16.00’s and so the risks are still higher than the rewards of trying to fade this war. Good luck and have a great day and weekend ahead Support levels – 16.62/65, 16.3500, 16.2000, 16.00/15.95, 15.8000 Resistance levels – 16.80/85, 16.9400, 17.00/05, 17.2500 | 
