Rand rebounds, remains bullish

African rand reached 7,5142 against the dollar in Johannesburg from 7,5867 and rose against the euro to trade at 9,9209.
The correlation between the rand and the euro is high to the point that rand movement is mostly influenced by the euro.
That has also seen some risk and liquidity improvements giving a bullish tone to the rand as risk aversion continues to subside driving the currency higher.
Risk appetite continues to push the rand to the upside as we continue to see that huge demand for riskier assets.
Money continues to flow into South African bond markets and equities as they edged a little bit higher on the JSE.
Going forward, we are likely to see a strengthening rand getting support from interest rates as compared to those in the US, UK and Japan that are near zero.
The so-called carry trades could play a key role as the rand seeks to reach key trend lines and not continue to trade in a range bound like trade as we have seen in recent weeks.
Remember higher yields attract investors in such currencies although the risk in such trades erases profits.
Loose monetary policies by the Federal Reserve Bank, Bank of England, ECB and Bank of Japan could give support to the rand in the medium term as we likely to see 7,40 in the rand.
Markets are trying to discount whether the European situation will calm the markets for the meantime running up to the European central bank meeting on tomorrow.
The dollar and the yen declined on the sentiment that the European leaders are structuring a plan to save Greece as the country has indicated that it will cut about 15 000 jobs in the private sector in 2012 as part of their austerity measures.
The euro rallied on such news as it reversed earlier losses to trade at US$1,3133 to the dollar from US$1,3065 and rose against the yen to trade at 100,52.
The euro fell slightly against the sterling pound to trade at 82,94 pence per euro. The dollar advanced against the yen to touch 76,64.
This week sees the European Central Bank meet as they seek to address the rate and growth issues.
The market is expectant that Mario Draghi, the ECB leader, will either cut rates or keep rates unchanged to boost growth, but that will put more pressure on the single currency as that reduces the yield on their currency and will fall against the major currencies.
In London, the Bank of England meets today as they seek to fight a stubborn inflation.
The Bank of England has kept rates unchanged in their previous meeting and added more stimulus to try and boost growth since growth has stagnated in the UK.
Another hint on stimulus in the UK could put pressure on the pound and US$1,56 to the dollar could be its cushion.
The European debt crisis has been pushing investors into semi-haven assets like the sterling pound as the pound strengthened against the euro to trade at 82,94 pence per euro.
The sterling pound gained against the dollar as it continued its strides near US$1,60 to trade at US$1,5824.
The market continues to get a beating from news emanating from Europe and as things stand, nothing is certain given that the Greek negotiations have been going on for weeks and still no tangible news to drive euro-dollar pair into ecstasy.
The Swiss franc continues to do well on geo-political issues coming from the Middle East and the Greek story that won’t go away.
The Swiss franc rose against the dollar to touch 91,23 US cents as investors want to avoid money-losing trades.
The Swiss franc advanced against the euro to trade at US$1,2062.
In the South Pacific, the Australian dollar appreciated against the dollar buoyed by Chancellor Merkel that European leaders would fully support Greece.
This increased demand for riskier assets as the Aussie dollar touched A$1,0753 against the US dollar. Australia is a mineral hub for the rest of Asia especially China and a soft landing on Chinese data could be a plus for the Australian dollar. The Reserve Bank of Australian meets this week to reflect on their rate and growth outlook and currently the rate stands at 4,75 percent.
Commodities market
Gold tumbled earlier to touch US$1 722,30 an ounce as commodities continue to trade between fundamentals and fear.
Crude oil declined to US$96,97 per barrel as geo-political issues in the Middle East continue to haunt the commodity.
Fundamentals and fear are still the main headlines as they continue to dim demand for commodities like oil.
The spread between crude oil and Brent crude has more than doubled, and before, the difference was just US$10 per barrel, which means crude oil is so volatile at the moment.