Until the markets get some sort of clarity about stimulus measures from either the European Central Bank or the US Federal Reserve‚ we will continue to trade apathetically. The rand finally broke higher in late afternoon trade as month end importer demand continued and the Euro/Zar cross was unable to get through support level at 10.00. The ZAR opened against the crosses much weaker this morning with Euro/Zar back up at 10.18 and Gbp/Zar 12.98. We must now look at weaker levels as we failed to crack the 10.00 level and is now back above 10.15, looks like we can break through 10.20 with some good support at 10.15. The rand should remain under pressure as importers use the opportunity of the good levels to take cover.
The local markets were once again dominated by flows trading for both dollars against the rand and crosses; specifically against the euro which saw the ZAR marginally weaker for the majority of the session. Once the local session closed, there was large scale dollar buying in New York, as well as month end covering, the market is waiting for the FOMC statement this evening local time, as the market started to square positions ahead of this to lessen the risk on current positions and hence the current levels of the rand at 8.2650 today.
[box]The rand finally broke higher in late afternoon trade as month end importer demand continued[/box]
Sovereign debt keeping markets volatile
Sovereign debt is still around and, no matter what stimulus measures they promise, will remain upper most in the markets mind. The euro got a slight lift against the dollar after France’s President Francois Hollande became the latest European official to reiterate his commitment to the euro and supporting it. The euro had a strong run previous week as speculation continues that the European Central Bank will step into the market and help support the euro over the long run, euro lifted by more than one present against the dollar. On Thursday Mario Draghi, the president of the ECB said that his institution would do anything to preserve the euro and German Chancellor Angela Markel with French president Francois Hollande vowed to defend the Euro in a joint statement on Friday.