10 May 2018

Week Ahead: We expect retail sales will lift by 5.1% y/y in March

Annabel Bishop

Chief Economist

on the back of increased sentiment and pre-emptive buying ahead of tax lifts in April

Figure 1: SA Monetary Policy Committee (MPC) meeting dates for 2018

Currency outlook for the week ahead and foreign portfolio flows:

Figure 2: Purchasing price parity value of the rand

After testing the R12.70/USD resistance level and losing as much as 10.0% against the dollar since February, the rand has managed to claw back some gains this week and at the time of writing was trading at R12.28/USD. The US’s decision to leave the Iran nuclear deal, sparked renewed geo-political tensions, placing emerging market currencies under pressure, on mounting concerns of an elevated oil price. However the release of lower than expected US inflation data yesterday, which reduced market fears of a rapid US interest rate hike trajectory, precipitated a sell-off of the greenback. As such the rand strengthened by around 2.0% against the dollar, its biggest one day lift since February, around the time Cyril Ramaphosa’s election as president of the Republic.

 

In the week ahead, the rand is expected to trade in a range of R11.80/USD – R12.30/USD, R14.20/EUR - R14.70/EUR and R16.20/GBP - R16.70/GBP.

Figure 3: Purchasing price parity value of the rand

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