The South African Rand was well supported this week indicating positive sentiment to news of plans by HSBCto buy up to 70 percent of Nedbank. The Rand traded between 7.315 and 7.368 to the US Dollar during the 23^rd August 2010 and 27^th August 2010 period.The Rand traded between 11.3534 and 11.4142 tothe British Pound in the same time period.

Old Mutual, as current controlling stake holder hasbeen involved in the talks with HSBC. Should the deal come to fruition the estimated value of the transaction has been pegged at about 49.9 billion Rand.Analysts believe the funds will be kept offshore with no actual Rand inflow expected. The South African Reserve bank will have ultimate sign off on where the funds will be held.

The Rand remained on the front foot in midday trade on Wednesday, despite continued global uncertainty and heightened fearsof a double dip recession.

RMB analysts said that risks of a double-dip recession are growing. "International data since mid-July has been very disappointing, especially in the US,and yesterday's housing data was probably the worst of the lot. Existing home sales dropped 27% in July alone to the lowest level in 15 years, fuelling concerns over fresh house price declines and yet another hit to consumer spending. 

"The rand, bizarrely, has out performed, this despite the disappointing local GDP figure - up only 3.2% q/q from 4.6% in 1Q10 - and the possible intensification of the public service strikes."

The public service strike put a slight dampener onthe growth of the Rand. The strike that started on Wednesday 18^th is still continuing after state workers defied a court order to return to work.

Composed by Candice Henderson

:: Note: The above exchange rates are based on"interbank" rates.
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The AUD started this week around the 0.8876 mark against the US dollar. Minor inter week losses were recovered by Friday the 27^th August 2010 where it ended at 0.8874 to the green back. In the same period the Aussie opened at 0.572208 and finished slightly stronger at 0.5710 against the British Pound.

For the first time in 70 years, Australia’s federal election has not managed to deliver a majority government. This has caused negative investor sentiment due to uncertainty in the political outlook.

The outlook for theAussie up to this point has been rather positive with strong fundamentals, rising interest rates and a lower than expected fiscal deficit.

However, all that seems irrelevant at the moment as traders are more concerned about the election results than the positive fundamentals that have been occurring over the last period. Phil Burke, the chief FOREX dealer at JP Morgan in Sydney, said that he expected the AUD to“stay heavy”. Markets are detoured by uncertainty and thus the currency is rapidly loosing its status as a “safe haven” investment.

The Australian Reserve Bank also released further encouraging economical data stating that thecountry has now entered its 20^th consecutive year of positive economic growth. No other developed country has been able to match this performance during this same time period.

On the whole thecurrency outlook is unfavourable but with strong fundamentals and positive growth there is still a light at the end of the tunnel.

AUD/ GBP:              0.571
AUD / EUR               0.698
AUD / USD:             0.886
AUD / JPY:              75.05

Exchange rates as of 11.17, 27August 2010

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Composed by Paul Gerber

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The New Zealand Dollar traded between 1.4174 and 1.4345 to the US Dollar during the week of the 23 August to27 August 2010. The Kiwi also traded between 2.1941 and 2.2160 to the British Pound in the same time period.

Starting this week with a lot of uncertainty,the New Zealand dollar is showing sings of turning. Looking back to the beginning of the week, the dollar was relatively under performing in the market as the week progressed.  

The reason for the poor performance was “increasing uncertaintysurrounding the outlook for the global economy, combined with a string of weaker than expected domestic data, have afforded the governor time to standpat,” said Helen Kevans, senior economist at JP Morgan in Sydney. Her views were shared by the market as the currency traded progressively lower untilyesterday. That was until the weakening was halted today.  

Strengthening of the New Zealand Dollar today was as a result of improvement in investor’s risk appetite, according to Bank of New Zealand market strategist Mark Jones.  

Jones further elaborates on the positive global market results, such as the “not-so-poor” job statistics that werereleased in the US as well as favorable consumer confidence in Europe. This positive global sentiment resulted in some minor carry-trades in countries with growth-sensitive currencies, like New Zealand and Australia. 

As trading of the currencies close today it is not unrealistic to believe that there should be some positive trading for the dollar come Monday.  

Composed by Kerry Howieson

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