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Johannesburg – The rand tracked a soft euro in the morning
session on Friday amid jittery global markets following Wall Street's plummet
overnight and the continuing Greek crisis.
At 09:00 the rand was bid at R7.8199 to the dollar from R7.7442 at its previous close. It was bid at R9.8951 to the euro from its previous close of R9.7923 and was at R11.4424 against the sterling from R11.5210.
The euro was bid at $1.2664 from $1.2626 previously.
"A local trader said: "The Dow was the nail in the coffin for any hope of stable markets. The euro continues to come under pressure which in turn could see the rand push through R7.85-90 against the dollar."
RMB analysts said in their morning report that yesterday's market freefall might have been exacerbated by algorithmic trading, computer glitches or human error on Wall Street but it is important to note that the euro collapse came before any equity move (US equities dropped 9%, with most of the adjustment coming in a 10-minute period, before recovering to close down a still large 3% while euro/US dollar dropped to under $1.26). "As such, there is no getting away from the fact that the Greek problems remain central to the market outlook.
"Whatever the case, the key point is that the entire market is going to be exceptionally nervous and volatile today. Markets seem to assume that the German parliament will approve the Greek bailout. If it doesn't, US dollar/rand should be easily north of R8.00, possible as high as R8.30. Greek markets in the meantime are completely frozen. The performance of the US jobs market seems relatively unimportant but in this environment expect exaggerated market moves after the data is released at 14:30. The G7 finance ministers are due to talk via phone tonight before a eurozone leaders summit," RMB said.
"The key question is whether this is a temporary bout of serious risk aversion (which could last weeks) or the start of something that can generate another rand blow-out? We still believe the former," RMB said.
"After trading to dollar/rand R7.95 overnight, dollar/rand is back under R7.70 this morning. This recovery looks overdone. Given a euro/dollar sub-$1.2700 level and nervous trade in the other high-yielding, commodity and emerging market currencies trade should be close to dollar/rand R7.75 – dollar/rand 7.80. This is just quibbling — the decision today is between dollar/rand sub-R7.60 or dollar/rand R8.00-plus," the analysts concluded.
Dow Jones Newswires said the euro recovered against the dollar and the yen in Asia on Friday as Japan's finance minister suggested Group of Seven industrialised nations will start trying to ease market jitters triggered by Greece's debt turmoil.
Yen loses most gains
Naoto Kan shrugged off speculation that the group may jointly intervene in the currency markets to support the euro, but he said at a press conference that G-7 finance ministers are slated to hold a telephone conference later in the day to discuss Greece's problem.
Kan's remarks boosted expectations that the world's industrialised countries will work as one to alleviate sovereign debt concerns in some European nations, encouraging investors to buy back the single unit, dealers said.
"If G-7 officials cooperate to deal with the Greece's debt issue, that could generate a sense of security in the market and help curb sharp falls in the euro," said Masanobu Ishikawa, manager of foreign exchange at Tokyo Forex and Ueda Harlow.
As of 04:50 GMT, the European single currency rose back to $1.2696 and ¥116.87 from $1.2599 and ¥113.26 in late New York on Thursday. The euro briefly plunged to a one-year low of $1.2510 and an eight-year low of ¥110.49 on the previous day.
In the early Asian session, the yen lost most of its gains versus its counterparts including the greenback, after the Nasdaq OMX Group (NDAQ) late on Thursday in New York said it would cancel excessively volatile trades made on the day.
The notice from the US bourse said that the exchange was working with other markets to cancel all trades executed at prices that were greater than or less than 60% away from the last printed price prior to 18:40 GMT.
The move prodded Japanese bankers to sell the safe-haven yen as expectations grew that investors could cover losses incurred by stock declines last night and might buy back risky assets, dealers said.
Looking ahead, players are paying close attention to US April jobs data due later in the day for clues on whether the world's biggest economy is steadily rebounding from last year's recession and the data results could help push global shares up, traders said.
- I-Net Bridge
At 09:00 the rand was bid at R7.8199 to the dollar from R7.7442 at its previous close. It was bid at R9.8951 to the euro from its previous close of R9.7923 and was at R11.4424 against the sterling from R11.5210.
The euro was bid at $1.2664 from $1.2626 previously.
"A local trader said: "The Dow was the nail in the coffin for any hope of stable markets. The euro continues to come under pressure which in turn could see the rand push through R7.85-90 against the dollar."
RMB analysts said in their morning report that yesterday's market freefall might have been exacerbated by algorithmic trading, computer glitches or human error on Wall Street but it is important to note that the euro collapse came before any equity move (US equities dropped 9%, with most of the adjustment coming in a 10-minute period, before recovering to close down a still large 3% while euro/US dollar dropped to under $1.26). "As such, there is no getting away from the fact that the Greek problems remain central to the market outlook.
"Whatever the case, the key point is that the entire market is going to be exceptionally nervous and volatile today. Markets seem to assume that the German parliament will approve the Greek bailout. If it doesn't, US dollar/rand should be easily north of R8.00, possible as high as R8.30. Greek markets in the meantime are completely frozen. The performance of the US jobs market seems relatively unimportant but in this environment expect exaggerated market moves after the data is released at 14:30. The G7 finance ministers are due to talk via phone tonight before a eurozone leaders summit," RMB said.
"The key question is whether this is a temporary bout of serious risk aversion (which could last weeks) or the start of something that can generate another rand blow-out? We still believe the former," RMB said.
"After trading to dollar/rand R7.95 overnight, dollar/rand is back under R7.70 this morning. This recovery looks overdone. Given a euro/dollar sub-$1.2700 level and nervous trade in the other high-yielding, commodity and emerging market currencies trade should be close to dollar/rand R7.75 – dollar/rand 7.80. This is just quibbling — the decision today is between dollar/rand sub-R7.60 or dollar/rand R8.00-plus," the analysts concluded.
Dow Jones Newswires said the euro recovered against the dollar and the yen in Asia on Friday as Japan's finance minister suggested Group of Seven industrialised nations will start trying to ease market jitters triggered by Greece's debt turmoil.
Yen loses most gains
Naoto Kan shrugged off speculation that the group may jointly intervene in the currency markets to support the euro, but he said at a press conference that G-7 finance ministers are slated to hold a telephone conference later in the day to discuss Greece's problem.
Kan's remarks boosted expectations that the world's industrialised countries will work as one to alleviate sovereign debt concerns in some European nations, encouraging investors to buy back the single unit, dealers said.
"If G-7 officials cooperate to deal with the Greece's debt issue, that could generate a sense of security in the market and help curb sharp falls in the euro," said Masanobu Ishikawa, manager of foreign exchange at Tokyo Forex and Ueda Harlow.
As of 04:50 GMT, the European single currency rose back to $1.2696 and ¥116.87 from $1.2599 and ¥113.26 in late New York on Thursday. The euro briefly plunged to a one-year low of $1.2510 and an eight-year low of ¥110.49 on the previous day.
In the early Asian session, the yen lost most of its gains versus its counterparts including the greenback, after the Nasdaq OMX Group (NDAQ) late on Thursday in New York said it would cancel excessively volatile trades made on the day.
The notice from the US bourse said that the exchange was working with other markets to cancel all trades executed at prices that were greater than or less than 60% away from the last printed price prior to 18:40 GMT.
The move prodded Japanese bankers to sell the safe-haven yen as expectations grew that investors could cover losses incurred by stock declines last night and might buy back risky assets, dealers said.
Looking ahead, players are paying close attention to US April jobs data due later in the day for clues on whether the world's biggest economy is steadily rebounding from last year's recession and the data results could help push global shares up, traders said.
- I-Net Bridge
