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On the wires… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quote of the day | |||||||||||||||||||||||||||||||||||||||||||||||||||||
“I am not a product of my circumstances. I am a product of my decisions” – Stephen Covey | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The indicators | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Currency crackdown… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
FXOne would like to thank Warrick Butler from Standard Bank for his contribution to the comment this morning. “I’m sorry” and “I apologize” mean the same thing. Except at a funeral.”
Current USDZAR level: 16.4450/16.4550 Rand range yesterday: 16.4350-16.6600 and NY close: 16. For all intents and purposes, the Rand continues to tread water albeit in some fairly choppy seas. It would be great to try and take advantage of some of the moves that we have seen, but with sporadic headlines interspersed with some inflationary pressures in both the US and domestically, the opportunities pass by quicker than Emma Radacanu in a tournament. If you are patient and trade the wider range, you only get a couple of opportunities in a week, but it is great deal easier on the mind. Since the peak of the war when the Dollar hit a high of 17.2500 against the Rand, it has trended lower, although “trend” is certainly authors licence, given how wild it has been at times. The reality is that despite the higher price of oil and the move lower in precious metal values, the terms of trade in SA are still positive. Throw into the mix the underlying structure of markets combined with human nature and the value within the SA financial sector remains positive. At the end of the day, an investor sees greater value in being paid for something they own (long SAGB’s) than paying for something they don’t (short SAGB’s). It is the basic rule of life – fear versus greed. As yesterday’s stat’s release showed, offshore investors were net buyers of SAGB’s to the tune of R10 billion last week. As each negative headline causes an impact to risky assets, investors are using that sell-off to add “value” to their portfolio’s, I guess all in the belief that eventually everything will be all right. There are of course building concerns around global inflation and economic growth, but these are longer term issues and subject to various nuances along the way. One of these is tomorrow’s US CPI release. After last Friday’s strong employment showing and the resultant move in the general dollar, the market will be wary of a bigger than anticipated move in CPI. In the meantime, however, there is still another SAGB auction to bid for today and the solid price action off the 16.6500 high’s yesterday to deal with. If we continue to see the usual exporter supply, then there is no reason to think the Rand can’t grind lower in the mid 16.30’s again. The technical picture is a lot clearer and easier to navigate with long term support coming in around 15.85/15.90 as per the trend line depicted below, a break of which could be quite consequential.
This support level is close in nominal terms but far away from reality, just given the backdrop in global events. You should be buying USD down here with a stop below the trend line but it’s a tough ask given the lower highs we continue to see. At the same time, there is very little compelling evidence to suggest that the war is over and that the world can move on from what has been a trying few months. As a market maker, I try keep the book as nimble as possible . Good luck and have a great day and week ahead
Support levels – 16.4500, 16.1500, 16.00/15.95, 15.8000, 15.6500, 15.5000 Resistance levels – 16.6500, 18.8000, 16.9400, 17.00/05, 17.2500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
On the radar… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Did you know? | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The London underground was opened in 1863. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
All the best, Kyle Moulster |
