Forex trading outlook
- ZAR under extreme pressure ,and risk volatility remains high
- Greece playing havoc with markets, Asian/Aussie markets all down
The forex trading outlook of the rand was way weaker in afternoon trade on Monday as tension between Germany and Greece raised the possibility of a breakup of the euro zone. This has been my view for awhile now and I am sticking to it. The market is very jittery right now, so the flight is into safe havens such as the US dollar and Swiss Franc, who are the benefactors at present. The euro was bid at US$1.2830 from Friday’s close of $1.2900. The prospects for the US currency haven’t looked so good for quite some time with all the uneasiness in the EC. The euro, which has spent many months largely ignoring the EC debt crisis, is now on the slide as Greece edges closer to doing the inevitable – bringing back the drachma and I think other currencies as well, if the debt crisis isn’t solved throughout the EC. We must watch the Euro as I have been bleating on now for ages that the sovereign debt issue is nowhere near over. The weaker Euro is dragging the ZAR with it as is the AUD.
We have also seen that investors have reduced their positions up on perceived risk aversion and this is effecting all emerging markets. My view is we will be at these levels for a few days. Trading range for me 8.02-8.25.Exporters must take advantage of these rate and % sell their proceeds as the ZAR gets weaker. They should also put a stop 8.000 if the ZAR regains some of its losses. This will eventually transpire as what goes up must come down.
Asian and Australian stocks have all opened down for the day. Euro on the other hand is still on the selling spot as the Greek political instability leaves the euro zone out in the open. Euro has tested 1.2815 before bouncing a bit higher at 1.2830. A new round of talks by Greek leaders is expected later in the day. The social uprising against austerity in Greece at such an early stage has raised significant implementation risks… and will serve to increase investor expectations again of a more disorderly default and eventual euro exit.Germany probably sidestepped a double-dip recession in the first quarter, as resurgent industrial production and record external trade helped drive away the economic clouds settling over the rest of the euro zone.
Economies across peripheral Europe have slumped into vicious recessions, Germany’s economy expanded by 3 percent last year and as much as 3.7 percent in 2010. German unemployment is at a two-decade low of 6.8 percent and falling, corporate profits remain close to record levels and confidence indicators point to ongoing growth.