The dollar has been king for some time now, and the trend continued during the course of the week. The start of the week saw the market show some interest in riskier assets until US CPI immediately stopped that. Since Tuesday, we have seen Emerging Markets experience sustained pressure as the rand, and its peers were sold off aggressively, while the Euro traded back to levels we have been used to for some while. That being said, the rand has traded in a 70cent range for the week and reached another year-to-date high today as we briefly broke above R17.70 against the dollar today.
Next week’s main attraction will be the September FOMC meeting, where the market is pricing in a 100% chance for a 75bps hike. The key yet again will be commentary after the meeting and could be the catalyst for further pain in the currency space. Next week we also have the SARB’s policy meeting, with another 75bps hike possibly on the cards. For now, we could see the rand remain under pressure, and a sustained break above R17.70 could be on the cards against the dollar.
