Daily Commentary - 19 December 2017

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- USD / ZAR 12.8121 - EUR / ZAR 15.1016 - GBP / ZAR 17.1319 -

Economic Events:

19 Dec : US Housing Starts

20 Dec : US Existing Home Sales -SA ANC Conference last day

21 Dec : US GDP ;Initial Jobless Claims

22 Dec : SA South African Budget - US New Home Sales -Foreign Exchange Market closes at 12:00

Market Commentary:

There was no doubt about it when we started Q4 of 2017 with the rand in a bearish trend as we watched our fragile currency spiralling upwards. At no point where we out of control but it was clear the closing three month of the year were really going to be tough on the local importer   -  Or where they ?

What an insane turnaround we are having, with the trend completely reversing itself after having dipped  under 13.50. We have seen a massive R1.00 recover since Friday morning, which logically can’t sustain itself but at present it most certainly is(There are indeed still far more bulls than bears in the ZAR).

As every S.A. Citizen already knows by now last night at around 6:30p.m. it was made public that Cyril Ramaphosa had won and was the new ANC president. International markets have reacted extremely positively to this news, far more so than anyone would have expected, especially when you consider that our fundamentals have not adjust at all and still remain very weak. None-the-less the long term outlook with Cyril at the helm is looking rather attractive to the overseas investor and it is clear that  no-one wants to get in last as buy orders on our currency continue to flood in.

Cyril Ramaphosa victory does come with some concerns and judging from the outcome it can be seen ; that this is an ANC that is deeply divided and Ramaphosa may very well find the task in front of him a rather mammoth one as we expect him to champion the fight against corruption.  The top six are split evenly between those implicated in state capture and those against it which in itself makes for some interesting dynamics and only time will tell as to how much progress he be able to make and what extend he will be able to bring those to justice. He may well get blocked at every turn with Ramaphosa still have the likes of Magashule and Duarte to contend with.

Across the Altantic we will see the House of Representatives  voting on Donald Trumps’ tax bill, amid the rising concerns that it favours mostly the wealthy. Although this has really been dragging out it does seem that the bill will eventually be going through, which should be Dollar positive, but does seem to favour U.S. owned business over foreign investors which may have a somewhat litergating effect.

Our Range for the Day :-     12.55   -    12.90