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Market Update - EUR/ZAR 13th April 2010
Both The Euro and the Rand have been subject to market moving stories over the last week. For the Euro it was confirmation of a €30bn rescue package for Greece. The Greek administration has not yet asked to draw down the funding, but markets will be closely watching todays bond auction to see if markets have been soothed enough to buy new Greek debt.
The Rand was left vulnerable to market jitters following the recent killing of white supremacist leader Eugene Terreblanche, which stoked a sharp rise in political tensions. Investors were also nervous last week ahead of a key Worldbank decision on a much needed loan to power company Eskom. Manufacturing data for February was also disappointing, which increases the chances of another interest rate cut, diminishing the appeal of the high yielding currency. The Rand dropped sharply during yesterdays session but recovered almost all of the days earlier losses, but given the potentially volatile situation the unit will remain vulnerable to setbacks, and is capable of dramatic movements when falling risk appetite dictates that investors move money out of high risk currencies.
The technical outlook remains in the Rands favour. The trend is very clear, but this weeks increase in volatility may signal a good time for holders of the Rand to reduce exposure.
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