Wed. Jul 17th, 2019

The elections are done. Now what?

The South African national elections dominated most of last week, and to no surprise, the ANC won once again.

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This Rand report is brought to you by Sable International

However, in this election, their majority decreased to the lowest level since 1994. The voter turnout followed the same route with the lowest percentage of eligible voters turning up in the history of democratic South Africa. The biggest surprise in this year’s election was that the right-leaning Freedom Front Plus almost tripled its votes.

Now that the elections have passed, we await president Cyril Ramaphosa’s next move in taking the country and his party forward. After the election win, he vowed to put the country on the right track and end the corruption that has taken a hold of his party. We will have to see how everything pans out, as the country still faces multiple hurdles, such as the failing SOEs and high unemployment rates.

The change in dynamic is good for the country as it is obvious the ANC cannot rule into perpetuity and this will hopefully push the ruling party to make some real change in the country.

8bcdb502 2019 05 14 the rand report - The elections are done. Now what?

Internationally, worldwide
tensions have been rising with the ever-escalating China-US trade war. On 1
June this year, the US will implement new tariffs on $200 billion worth of Chinese
goods. The US has accused China of changing the deal. Overall, this will not be
good for either economy. With US elections taking place next year, the Chinese
could choose to delay negotiations until a new administration comes into power.

In the week ahead, we
look to global politics to dictate currency flows as the uncertainty of the South
African elections has been put aside. There aren’t any big events coming up on
the global calendar this week, so geopolitical issues will be the main driving
factor for currency movements. Traders should still practice caution this week
as nothing is set in stone and volatility in the markets should be expected.

Market event calendar

Tuesday 14 May

  • UK Unemployment Rate: Expected to remain stable, any divergence
    would result in volatility.
  • SA Unemployment Rate: Expected to marginally increase, this
    should not affect the ZAR too much.

Wednesday 15 May

  • EU GDP: Expected to remain stable, any divergence would
    result in volatility.

Thursday 16 May

  • AUS Labour Market Report: The
    unemployment rate is expected to stay at 5% – this shouldn’t affect the
    currency markets too much.

Friday 17 May

  • EU inflation data:
    No change is expected, thus no drastic currency movements expected.

-Sebastian Steyn

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