just two hours , the Rand gained 30c ‒ and it didn ’ t stop there , but continued to push still lower over the next week . This left the market at large completely bewildered and confused . How could this make sense ? What had changed fundamentally ? Surely the Dollar should have strengthened ?
Yes , fundamentally , it should have ‒ but it didn ’ t . That is because fundamentals determine the longterm trend of a market BUT the market can move counter to this for considerable lengths of time because it is not the main driver of the market by any means .
But let ’ s continue with the good : The Rand ’ s crazy run had brought it to touch 12.31 on 27 March ‒ levels not seen in nearly two years and levels that were thought impossible just a few of months back . By this time , all Rand negativity had vaporized completely as sentiment had turned fully Rand-positive . With the ZAR powerhouse expected to continue its merry march , it seemed no amount of bad news could stop it .
However , our analysis was showing that Rand had reached an extreme and was ripe for a reversal ( as the chart shows on the right ):
When a trend is nearing exhaustion point and a reversal is imminent , there is often a significant event that triggers that reversal ! And who better to provide the trigger but Jacob Zuma himself !
It ’ s almost as if the man was caught up in the euphoria that no bad news whatsoever could affect the Rand , and he decided to put this to the ultimate test and did the unthinkable by recalling Finance Minister Pravin Gordhan and Deputy Minister Jonas from an investor road trip in London . And of course , the Rand reacted ‒ big time ! But , this time , as expected .
By the end of the day the Rand had lost 50 cents . In no time , all the good had gone bad . How quickly things change ! Sentiment was turned on its head , as rumours , speculation and uncertainty abounded . Zuma clearly had Gordhan and Jonas in his sights , but Gordhan ’ s exit was by no means a done deal yet , with it being rumoured that the SACP and some of the ANC Top Six were against the removal of Zuma ’ s Achilles heel Gordhan . Of interest , by Thursday the 30th the Rand seemed to have settled a
bit , but our updated analysis gave a very clear signal ( as can be seen from the chart below ) ‒ a move stronger before the Rand took off once again .
Clearly , something was going to happen
Already Zuma was active early in the day with his comments to the National House of Traditional Leaders : “ We must do everything within the law . We are not saying , let us go and take the land . We are
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