Fears that Ireland would default on its debt have sparked a sell off in world markets during the past week.The correlation between the EURUSD and market direction is very strong.
When Ireland accepts assistance in the form of loans or a bailout, expect the Dollar to weaken again which should send commodity prices soaring. Our market is commodity driven, so expect the JSE to rally.
Local retail statistics released yesterday was positive, but could be a deterrent for the Monetary Policy Committee to lower the repo rate today. The decision will be broadcast at 15:00 local time.
Lower interest rates would favour retail stocks and one could see cash flowing to the equity market looking for yield. ZAR should weaken if the market reacts rational to a lowering in repo rate, but let us see what the decision is.
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