- Risk aversion hit the beach.
- Positive SA retail sales data cannot increase USD / ZAR.
- Spotlight on FOMC.
ZAR FUNDAMENTAL BACKDROP
Geopolitics, COVID-19, Fed unrest and uninspired local data have sparked bullish bias this week as global risk aversion increased. The South African beach touched the height of the swing yesterday and is now floating around 14.9000 after the predicted inflation data (see table below).
Source: Stats SA – Consumer price index (CPI)
June retail sales data gave beach bulls real numbers (10.4%) to win ratings 9.6%. I believe this is only temporary, as this marginal performance is a minimal factor USD/ ZAR currency pair.
Source: DailyFX economic calendar
Beach linked consumer goods has also taken a back seat this week Closure of a Chinese port and the slowdown in economic data. Spotted gold, platinum and iron ore trading is lower during the week, thus contributing to the weakness of the beaches. Emerging market (EM) currencies follow the example of the JP Morgan Emerging Markets Currency Index (EM and USD benchmark):
Today, markets are firmly focused on the future FOMC meeting. The curtailment is expected to occur sometime between September 2021 and December 2021, but markets will react to how QE narrows itself. For example, does the central bank reduce the purchase of assets by a certain amount at each meeting. The guidelines, published later today, provide further information for the dollar. The chart below shows the significant decline in the rand and the dollar in 2021. ZAR has maintained a positive stance on the USD for much of 2021, but is now printing in red, which could slip further Hawk Feeding follows.
Global exchange rates vs 2021 USD:
USD / ZAR DAILY TABLE
The chart was compiled by Warren Wenket, IG
On Monday ox pennant (blue) has so far appeared in the form of textbooks pricing pushing towards the elusive 15.0000 psychological level. In principle, short-term prejudice points to further increases, but the details of the FOMC are crucial.
The Relative Strength Index (RSI) rises steadily, but is still far from overbought territory, leaving room for further rise. Short-term support is offered within 20 days EMA from last week and should not be downloaded as a key area for accession.
- 15.1014 – high swing (March 2021)
- 20 days EMA (purple)
– Written by Warren Venketas for DailyFX.com
Connect and follow Warren on Twitter: @WVenketas