SAR gains likely to remain solid, break above key 14.00 level seems unlikely, says RMB

The recent gains in the South African rand (SAR) are expected to remain on a solid path, largely driven both by global economic moves as well as local issues. However, a break above the key 14.00 level seems unlikely for the time being.

The dominant issue globally has been the weakness in the dollar. This weakness cannot be called large by any means but just the reversal of the trend for gains has been enough to spur on all risk currencies, including the rand.

Moreover, local issues remain dominant. There has been no news of major importance but sentiment does appear to be turning more positive. The biggest sign of this comes from foreigners, returning as buyers of both equities and bonds after the sharp selling off last week, RMB Global Markets reported.

Ina ddition, South Africa’s ongoing court case to hear President Zuma’s request for an interdict of the Public Protectors Report will not be held today but rather only on November 1, alongside that of Minister Van Rooyen’s.

Meanwhile, there is nothing meaningful in today’s data calendar except for China’s 3Q16 GDP and the September monthly data set which will be released early morning. Expectations are for GDP growth to come in at 6.7 percent y/y, unchanged from 2Q16.