Brexit fears continue to dominate foreign exchange flows
Over the past week, we have not seen much happening out of South Africa from a data point of view. Gold and mining production have fallen, which is to be expected. The ZAR has been trading in an average range of 18.75 – 18.25 against the Pound. We are now sitting in the 18.50 region. Many of these foreign exchange flows arise from Brexit headlines.
In the US, we had the mid-term elections where the Republicans lost control of the house. This resulted in USD strength as soon as there was a known result. This USD strength has continued into the new week, which has pushed it into one of the best performers against the ZAR. Although one would expect the rate to be more in the 15 region, we have been in the mid-to-low 14's against the greenback.
On the local front, it seems the markets aren’t phased by political events anymore, as new headlines from the local markets don’t move the ZAR all that much.
Brexit headlines dominate the foreign exchange markets, as the UK seeks to secure a deal by the end of November. This is the main risk factor that the UK faces in the short term.
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