Gapex Morning Gut Feel Report 5th of December

1.ZAR survives last rating by S&P
2. FICA amendment bill sent back to National assembly
3. SA important data this week
4. Italian referendum fails and PM says he will resign

ZAR has strengthened after the release of the US data and S&P rating agency statement decision. We then had the failure of the Italian Prime Minister for his call for a constitutional referendum which failed and has subsequently stated he will resign. This will put more pressure on the ECU and Euro. The week ahead is an important one with the release of SA data, namely PMI data, Consumer Confidence and GDP. Now with all the previous news and data releases together with some political stability, more emphasis can be generated on fundamentals’ the banking front, we have the return of the FICA amendment bill to National assembly by JZ stating he is concerned about the constitutionality of it. This is putting pressure on the Banking system with International financial institutions, who are looking at the outcome and this could jeopardise our credit rating and that of the banking system. Talking to traders, they are still small long of dollars. Trading range 13.65-14.25.

USD/ZAR Hourly Candle

So post the NFP & S&P rating the ZAR has managed to strengthen over R0.30.

The current formation is nowhere and thus I will advise staying out for the time being until we have a better view.

“In Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic.”

– Paul Tudor Jones

USD/ZAR Daily Close

Now that we have most of the data out of the way I would advise looking to buy the USD from

R13.65 – R13.30 in the coming weeks with a view to a move back over the R14.10 level.

“I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms. – PTJ