Rand weakens on eurozone concerns

Per : @fin24

"Johannesburg - The rand weakened in midday trade, off 1%, and in line with the single currency as fears over the state of the eurozone continued to drive sentiment.

At 11:52 local time, the rand was bid at 8.0859 to the dollar from its previous close of 7.9998. It was bid at 10.9455 to the euro from 10.9031 before, and at 12.8201 against sterling from 12.7169 previously.

The euro was at $1.3541 from $1.3623 previously.

A local dealer said: "We are seeing a similar play to yesterday with renewed concerns over the eurozone. We all know that this is not going to blow away any time soon so expect the rand to fluctuate accordingly."

He put resistance against the dollar at 8.12-8.13.

Standard Bank analysts said in a morning note that the rand had fallen victim to the eurozone crisis.

"The rand weakened sharply yesterday as risk aversion returned. The yield demanded on Italian bonds rose to a eurozone high at an auction yesterday."

Clearly, investors remained concerned about Italy's ability to get its debt under control despite the recent change in this country's leadership.

"Earlier in the day, the rand had firmed after Japan's encouraging GDP data; this economy has returned to growth for the first time in four quarters. However, this rally was short-lived."

Standard Bank said while the rand might enjoy further bouts of strength into year-end, events in Europe were still calling the shots.

"We therefore believe that the rand will weaken to our year-end target of R8.20/USD."

Meanwhile Dow Jones Newswires noted scepticism from Commerzbank. "There is some GDP data as well as the ZEW economic expectations data due for publication in Europe today. Disappointing results might make it more difficult to contain the debt crisis and as a result might put further strain on the markets while positive surprises are unlikely to change the picture."

Germany's ZEW was expected to show that investors and analysts became less optimistic in November, with the current conditions index seen falling to 32.0 from October's 38.4. While this was significantly off the recent peak of 91.5 in May, it was still in positive territory, said Rabobank.

In the US, retail sales, producer price index and Empire State manufacturing were expected at 13:30 GMT, while business inventories were due out at 15:00 GMT. German GDP rose 0.5% in the third quarter, compared with the second quarter, in line with estimates. Meanwhile, French GDP expanded 0.4% from the second quarter, also as expected. "


STEVEN:
If one looks at above it is good as it shielded our market against the negative Europe Markets most down 1.5% and shaky.

The rand's fairer value in my understanding should be at about 8.15 to the $.

It seem to flitz back and forward between 7.88 & 8.15 in a two week bracket.
Until the euro crisis is sorted we in for the sideways movement !!

Hold on, it has to settle soon. The indicators are very Bullish which is good.