The rand was trading weaker this morning as all traders eye discussions at Jackson Hole. The ZAR is trying very hard to start performing better but market trends show it lacks the steam and is showing signs that it can run much stronger. The market is standing by as we are likely to see an extension of this, meaning ZAR will stay trading around 8.40. The headline news story is that European Central Bank president Mario Draghi will not be going to the Fed’s Jackson Hole symposium because of his workload. The bulls say the ECB is getting its policies in place for next week’. The market say the ECB is still arguing about what to do, as it risks the ability of been seen as a dog with no teeth. The weakness of the ZAR saw some selling by exporters and the higher levels and we believe that these are good levels to take advantage of.
[box]The bulls say the ECB is getting its policies in place for next week’[/box]
Risk and Volatility still in the markets as evident yesterday
“The euro strengthened as the dollar lost some of its safe-haven appeal on Tuesday after Draghi indicated he would not attend the Jackson Hole conference. Draghi’s decision fuelled expectations that European Union authorities are working on the imminent introduction of measures to stem the EU crises.
Sovereign debt still abounds and is keeping markets volatile.
The sovereign debt issue is a mammoth problem and without extreme austerity measures in the EC it will continue indefinitely. Greece still have to repay their debt and this is looking incresingly unlikely .
My gut feel is that the market must be a little long of dollars and, as in life, what goes up must come down. We see imminent profit taking and the ZAR back to the 8.30 levels.
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