Rand firmer as Covid-19 vaccine hopes boost risk demand

The local currency was 0.65% firmer at R18.22 per dollar in midday trade.
Image: Waldo Swiegers/Bloomberg

The rand strengthened modestly on Tuesday, extending a rally from the previous session sparked by growing hopes of a Covid-19 vaccine, while investors looked ahead to local mining and manufacturing data.

At 12:07 the rand was 0.65% firmer at R18.2224 per dollar, holding at a four-session best reached on Monday in a strong day for emerging currencies after encouraging results from the trial of a vaccine for Covid-19.

The rand was 0.27% firmer against the pound at R22.3023 and 0.32% agains the euro, at R19.9537.

“Growing optimism around a Covid-19 vaccine that is showing promising results helped to restore some positive market sentiment, while the Federal Reserve’s unwavering support for the US economy was also perceived as risk-on by the market,” said Bianca Botes of Peregrine Treasury Solutions.

“The rand continues to be driven by sentiment, which is essentially a balancing act as it switches between risk-on and risk-off as the pandemic unfolds,” Botes added in a note.

US biotech firm Moderna has produced protective antibodies in a small group of healthy volunteers during a safety trial launched in March.

Locally, releases of mining and manufacturing figures for February, albeit for the period before the nationwide coronavirus triggered lockdown, will be eyed for the likely extent of the economic slowdown already reflected in high frequency data.

Bonds extended their healthy rally, with the yield on the government issue due in 2030 down 9 basis points at 9.050% early on Tuesday, after falling 46.5 bps in the previous session.

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The Dollar Rand has again been pushed to the ‘’front benches’’ after the Junk Grade and one called Govind 19.

but

”If I had a good quote, I’d be wearing it”

Bob Dylan (1941 -)

We see the daily reports and comments about Rand’s performance (today’s heading that the Rand firmer – 0, 17 % is only a couple of points really and actually an insult to lots of market participants – let us begin at 10 % please!)
We are living in a country of ‘’selective prosecution’’ or ‘’no prosecution’’ which has become institutionalized in sunny SA. The Zondo so far has only been a ‘’ damp squib’, as we all expected more by now.
The USD/ZAR is both a commodity-and an Order currency. Ask any old seasoned Dollar Rand trader out of the eighties (and I know quite a few) onwards, what he wanted to know every day before he started making prices and/or took out a trading position for the bank – what orders are out there in the market today? In our days, the Rand did now ‘’ move on-air’’ like today under the ‘’computer algorithmic ‘’ trading.
‘’Once a dealer, always a dealer’’

Sorry – should read 1 % and not 10 %

Pray tell us “which” model broomstick are you flying at present?

I feel that trying to predict a currency’s movement, especially one as volatile as the Rand, especially short-term, is a bit of mug’s game. That said, I’m curious what you think of where it’s headed in the next month or so.

I can’t shake the feeling that soon, the world will realise that the fundamentals have a distinct whiff of Nagasaki about them.

The Rand lately trades in 50 Cent box ranges
I currently look at the USD/ZAR to trade in 50 cent box ranges:

Around 19/03/2020 it weakened 50 cents from 17.25 to 7.75; thereafter it strengthened from 17.75 back to 17.35; it then weakened from 17.35 to 18.00 (normally when a big Figure in the rand (in this case 18) gets broken the directional trend is strong (at least 50 cents).
The Rand then weakened from just below 18 to 19.25: From there it strengthened back to 18.50 (witch held) and weakened another 50 cents after a couple of days to 18 (witch held) in mid-April.
From mid-April it weakened 60 cents to around 18.60 – it ranged for a short while and then on 18/4/2020 it started weakening to 19.10 – it went sideways for a while and then in mid-April strengthened from 19.10 to 18.50 (which held again); at the beginning of May, it weakened from 18.20 to 18.70 and started drifting sideways but stronger to 18.80 ish.
The rand drifted stronger to where it currently is at 18.22 –I think it will test 18.00 soon.

I see it breaking 18.00 en route to 17.50 as there seems to be ‘’lower tops and lower bottoms ‘during the last couple of days.

I hope that helps – but if 18.00 holds (the 50 cent strengthening could be over – and it could also bounce back to 18.50 —watch price action at 18!

End of comments.

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