Rand News – The USD remains under pressure due to increasing unemployment levels. Welcome to this weeks Rand News. In our weekly currency roundup this week, we look at some important data released and the affect this has had on the currency market.

USD/ZAR News

USD/ZAR began the week with bearish impetus as an emerging market rally propelled the pair to test lower prices. The US Dollar has remained under economic pressure as unemployment rates continue to grow, consumer sentiment remains weak and the country faces a potential second wave of Covid-19. 

After the risk-on approach gassed out in the markets investors didn’t necessarily revert to the US Dollar as a safe haven and instead the protracted transfer of power in the Whitehouse is affecting buyer sentiment. The delay affects the combatting of the covid-19 death toll which has breached a quarter of a million people and any further progress in state fiscal intervention decisions – leaving millions at risk of losing grants which sustain their livelihood.

Technical direction forecast – Support levels were tested around R15.30/$ and failure to break through these braced levels has seen a technical reversal upward from Wednesday. We remain on a downward trend but viewpoints are held that the pair has run out of gas and is at a point of curvature.

Remaining above R15.39/$ has seen USD/ZAR form a support at R15.42/$ and we expect to test a resistance of R15.65/$. A rupture of the resistance may see highs of R15.80/$ in the week, alternatively a failure to breach may see sellers take the momentum downward.

EUR/ZAR News

Following an expansion of almost 13% in the eurozone economy last quarter, analysts anticipate that the EU economy will shrink 2.5% this quarter. The ever active European Central Bank President Christine Lagarde reinforced previous pledges to maintain easy monetary policy and end detrimental budget conflicts. Near-term apprehension in the form of sluggish European economies due to covid-19 restrictions and rising second wave concerns continue to affect the strength of the EUR.

Technical forecast – the EUR/ZAR stayed in the lower region of our expected range this week, not being able to convincingly puncture and remain above a resistance level of R18.39/€.

A sideways trend seems to be possibly forming within a channel between a bottom of R18.17/€ and high of R18.55/€ – which has been a range since the 9th of November. Should the EUR break above out of this passage then R18.70’s may be on the cards.

GBP/ZAR News

Optimism gradually began seeping in this week amongst market players that there will be a positive outcome in regards to the Brexit deal. Britain remains on the brink of forfeiting access to customs union and single market next year as an agreement with the EU remains on constant ice – the EU has moved to publish plans to cover the plans of a no-deal trade outcome.

Prime Minister Boris Johnson cited that his top officials are still in a realm of uncertainty over reaching a consensus with the EU, however the UK are on the brink of securing a trade deal with Canada in hopes of using this as a replacement over the deal Britain has with the European Union. Growth forecasts are not to be revised as advised by Bank of England deputy governor Ramsden, but measures such as introducing negative rates to stimulate the British economy are realistically on the cards at this point.

Technical direction forecast – GBPZAR has remained religiously in our downward channel, currently the gradual down trodden movement has seemed to run out of steam and is slowly forming a slight sideways movement with a bearish bias.

In the lower region of the pair a support at R20.26/£ remains sturdy, while the top side resistance is formed around R20.57/£. We expect further weakening to test the bottom and possibly touch R20.12/£ with trade and shutdowns not aiding the pound’s condition, however any weakness may be balanced out by a downgrade on the rand.

South African Rand News

What is the exchange rate today? The Rand rode many a wave this week which influenced its behaviour – namely there was an emerging market surge in the beginning of the week seeing the Rand strengthen, followed by further impetus from a second announcement of another more successful vaccine from Moderna.

However by close on Tuesday we began to view a technical turn-around as the ZAR saw three days of losses due to economics repercussions of the coronavirus, as well as caution over yesterday’s Reserve Bank decision and possible grim rating agency announcements.

By Thursday the Rand lost its top spot in the emerging market arena to the Turkish Lira, and tested a high of the week at R15.58/$ on USD/ZAR. This morning we see a stabilization from yesterday’s knee jerk reaction to the unchanged rates and this could be investors pushing the pairs down in expectation that a downgrade to its lowest in 26 years by Moody’s rating agency later on could push the rand back to test a R15.60/$.

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