- The beach is dominated by global risks.
- Focus on China and the US next week.
ZAR FUNDAMENTAL BACKDROP
After a strong last week USD / ZAR bulls, offers the next week a lot of basic drivers that could provide guidance Emerging Markets (EM) currency. Recent positive unemployed claims data and flat consumer price indices have left markets undecided. Unfortunately, ZAR supporters received a slight boost THI the announcement was not enough to overcome better-than-expected unemployment. In particular, the focus will be on tightening Fed QE FOMC will meet on Wednesday (see calendar below).
From a South African perspective, July and June inflation (see calendar below) and retail sales data are included. July inflation is an interesting statistic as markets look to see if recent unrest has worked or not. They can have some effect USD / ZAR but more emphasis should be placed FOMC meeting later in the day. Exposures should be managed efficiently using appropriate risk techniques, as volatility is expected both before and after announcement.
USD / ZAR ECONOMIC CALENDAR
As China finds it difficult to combat the COVID-19 delta variant as new cases become more frequent, pressure will affect goods worldwide. China is South Africa’s main trading partner; demand for local exports (iron ore, platinum, gold etc.) is likely to decrease, thus damaging the rand.
USD / ZAR DAILY CARD
The chart was compiled by Warren Wenket, IG
The daily chart shows a solid trend line (black) that keeps the strength of the rand from mid-June. Last week’s bullish run is a clear test 14.9000 handle. A key issue this week is the 20-day EMA, which is seen as a short-term grant – coinciding 14.6000 the accession area (blue), which has been both a support and a resistance area. Closing these key levels down may trigger a downward movement 14.5000 psychological zone.
The rising result of the weekly economic data may increase later 14.9000 and beyond to the July swing 15.0000.
- 14 7500
- 20 days EMA (purple)
– Written by Warren Venketas for DailyFX.com
Connect and follow Warren on Twitter: @WVenketas