Rand recovers after long weekend
After Friday's US non-farm payroll number and a lack of liquidity in the market yesterday, we saw the Rand touching the R18.50 level. We expected the Rand to recover slightly as liquidity returned to the local market. That turned out to be the case as we saw the US dollar slipping against the Euro, and that bodes well for the Rand as the Rand clawed back some of its recent losses and is currently trading at R18.30 against the US dollar. The Rand has also lost significant ground against the Euro and the Pound, as the Euro is currently trading at R20.02, and the Pound is eyeing the R23.00 level at R22.80.
Data will drive the backend of the week
The Rand move could be halted as we have the US CPI number coming out tomorrow, with the market expecting the number to print at 5.2%. Any significant miss on this number could see a very volatile market. A higher print will surely be bad for EM's as this would force the hand of the Fed further, and a run into US dollars could be expected; however, the opposite is also true. We have seen risk sentiment being a little risk averse as Gold is also still trading above $2,000 per ounce. The much-spoken-about oil cut only interested markets initially, as oil has been trading around $84.00 per barrel for the past week.
