Rand weakens as investor appetite for risk drops

exports will be under threat as we head for a global economic slowdown.
This shifts the spotlight back to haven currencies like the Swiss franc from risky assets like the rand dimming demand for South African assets.
Still, the underlying demand is weak and this will see investors cut bets on all risky assets, the question is what will bring a jump in the rand out of the sevens region.
The first quantitative easing and the second one boosted demand for rand assets and the so-called carry trades did the trick. The Fed will most likely step in to stimulate growth in the ailing US economy as it looks to review its monetary stimulus that could weaken the dollar and increase bets on gold and other precious metals.
At the moment, given the global risk aversion everything is in favour of the dollar and that puts pressure on the rand.
Risk appetite dropped on concern Europe’s debt crisis is worsening, pushing investors to sought haven amid Greece might default.
The sole driver for the rand at the moment seems to be risk appetite and when risk appetite is weak the rand tends to under perform.
It’s not only a problem facing the rand some of the riskier assets are also in the boat. All of this speculation around the eurozone regarding Greece defaulting doesn’t help the risk assets such as the Aussie dollar, New Zealand dollar known as the kiwi,
Nowergian krona and the Canadian dollar. People have been piling into US dollar assets, riskier assets have been sideswiped including the rand.
In Australia, the slowing down in global growth may harm sentiments and reduce demand for Aussie exports.
Aussie declined to 1,0333 against the dollar on Greek concern. Data spilling through the markets has affected emerging markets to the downside as this has cut down demand on all their raw materials.
European markets
The pound declined on investor sentiments that the Bank of England will keep rates at near zero to support growth.
The market has built this underlying bearish view on the pound because of economic backdrop. The pound declined 2,2 percent to US$1,5866 its biggest drop since May 6.
It depreciated 1,6 percent against the yen and rose most on record against the Swiss franc after the Swiss National Bank set a cap on the Swiss franc to curb its strength, it rose 9,8 percent versus the franc to trade at 1,3582 per pound.
The pound rose 1,8 percent against the euro to trade at 86,98 per euro.
The Swiss franc fell against the dollar and the euro as the Swiss National Bank moved to weaken their currency as they established a franc ceiling at 1,20 per euro.
What had pushed the Swiss to record highs was the current financial turmoil in the eurozone that debt crisis and the Federal Reserve Bank keeping the rates at record low increasing demand for the Swiss.
Investors are seeking safe haven currencies away from mainstream currencies like the euro and the pound.
The franc fell 0,1 percent versus the euro to trade at 1,21589 and dropped 0,5 percent to 87,99 cents per dollar.
Despite the euro strengthening against the Swiss, investors still remain bearish on the euro as the currency is showing signs that all is not well within the region.
The euro is on a free fall as financial panic heats up; the bias is not in favour of the euro against its six trading partners. The euro fell to its lowest in six months against the dollar to trade at US$1,3577.
All of the moving parts are biased in favour of the US dollar bids for safe haven flows.
Gold advanced as investors sought a store value amid declines in equities, euro and high-yielding currencies such as the Aussie dollar and the South Africa rand to trade at US$1869,20 an ounce.
Crude oil declined to US$85,25 per barrel on renewed fears Greece might default and questions surrounding the eurozone debt crisis.
My chart of the day, how low can the euro go? Is 1,30 the next stop for the euro?