Rand stages a recovery, but volatility looks set to stay
Markets are attempting to push higher after Wednesday’s rout, as focus remains on data amid the fear of a global economic slowdown
The rand recovered slightly against major global currencies on Thursday morning, after having slumped 2% against the dollar overnight, although investor sentiment remains fragile.
Global risk assets were sold off across the board on Wednesday after a series of disappointing economic data releases out of Europe and Asia raised the concern that the global economy is slowing much faster than expected.
The rand recovered after reaching an almost 11-month low on Wednesday, the local currency remains the most volatile currency tracked by Bloomberg, with one-week implied volatility at its highest level in four months.
At 9.40am the rand was 0.8% firmer at R15.2959/$, 0.74% to the better at R17.05/€ and 0.67% up at R18.4681/£. The euro was flat at $1.1147.
Although markets were attempting a recovery, it was not convincing, and the situation may easily reverse by the afternoon, said Oanda analyst Craig Erlam in a note.
“In these markets, I wouldn’t be surprised to see a rollercoaster of a day and there’s plenty of data coming throughout to provide the catalyst,” Erlam said.
Focus on Thursday is on UK and US retail sales data for July, as well as US jobs numbers.
The rand remains fragile, and a break above R15.50/$ will signal a new bout of weakness, said Peregrine Treasury Solutions corporate treasury manager Bianca Botes in a note. Should this not occur, the rand is likely to trade in a range of R15.25/$-R15.48/$