Why the South African Rand May Go Further South

PUBLISHED: Tue, 09 Oct 2012 12:54:02 GMT

Kelley Holland

Source: Why the South African Rand May Go Further South

Labor unrest in South Africa is weighing on the rand, and this strategist sees more weakness ahead.

It’s been a rough time in South Africa lately, with labor unrest roiling the country – and the currency.

But if you think it’s time for the rand to turn around, think again, says Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank.

I don’t want to fight the trend,” she told CNBC’s Melissa Lee, since so much of the trading in the rand is driven by electronic models. So when the models flip, Bourdeau says, “you don’t want to fight that flow because the macro flow in the FX market in terms of rand is much smaller than this e-flow.” Instead, she says, “you really have to wait until these models decide to turn around and go long rand and you can jump on the trade.”

Bourdeau sees more opportunity selling the euro  against the Canadian dollar. She is unimpressed by Monday’s developments at the euro zone finance ministers’ meeting, arguing that investors really just want to see Spain request a bailout. But she likes the latest “blockbuster” employment report from Canada.

Bourdeau wants to sell the euro against the Canadian dollar at 1.2660 with a stop at 1.2810 and a target of 1.2350.

Tune In: CNBC’s “Money in Motion Currency Trading” airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

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