The past week saw commodities and equity markets slump as concerns over the European debt crisis escalated, with bond yields hitting record levels. This morning there is a sense of optimism as rumours surface that the IMF will support Italian bonds.
WTI increased by $1 in yet another turbulent week on the oil market. Oil prices traded listlessly, bounced around by news out of Europe. However, the oil price remains relatively well supported, mainly due to supply concerns caused by troubles in the Mid-East.
After declining to key support at $95, WTI bounced back. The bounce formed a bullish “hammer” formation. We expect range trading for the week between $95-100. A break of $100 to the upside will open the way to $104-105. We believe that this strong resistance will hold and do not expect a breach of $105 this week, unless we get spectacularly good news out of Europe.
We expect a range of $95-100 for the rest of the week.
The Rand once again weakened by 3% during the past week. The European debt crisis keeps weighing heavily on the local currency as emerging markets and most commodities sold off. Key technical levels were also broken. After a close above the R8.25/US$ level, the Rand capitulated and weakened quickly to a low of R8.6/US$.
The Rand is extremely oversold and looks to retrace some of its losses in the coming week. R8.25/US$ that was support has now become resistance. If the Rand manages to close below R8.25/US$, we expect a return to the R7.8-8.20/US$ range.
We expect a range of R8.1-8.5/US$ for the rest of the week.
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