overview

The Rand has faced major bullish strength across the board in the past two weeks. Volatility is expected next week as the FED is due to hike their interest rates again and US jobs data is due to be released as well.

The Dollar’s strength this week was buoyed by bets on rising U.S interest rates, as investors expect an injection of 50 basis points on the interest rates by the FED next week. Doubts about growth in Europe and China have given the greenback a major advantage as well, as the safe haven is more attractive to invest in. It has been a quiet week economically for the Dollar. The next FED interest rate decision is expected to be held on the 3rd or 4th of May 2022, and investors have priced in a 50 basis point hike. In turn FED officials want to keep the recovery on track and avoid in particular any large jump in unemployment from the current 3.6% and next week’s jobs data will show if any progress has been made. Since trading over R15.50/$, many economists note the Rand is in oversold territory but investors have been rallying the Dollar in a move which has been months in the making. Health experts in SA state that the fifth wave is upon us as we enter winter months now and many are calling on President Ramaphosa to invoke new measures to curb infections.

Technically:
It has been a good week for the Dollar as it has strengthened from R15.58/$ to a whooping high of R16.13/$. The USDZAR saw strong bullish strength consecutively the last two weeks, and is finally today, seeing some consolidation as buyers burn out ahead of the long weekend. High volatility will be expected next week as the FED is expected to bump interest rates and markets may possibly test R16.20/$’s.

european markets

Despite the Euro strengthening against the rand this week, further woes trickle into the Euro market as Germany reported that they are no longer against an embargo on Russian oil, which could further tighten supplies in the already stressed global crude market.  Furthermore Russia has cut off gas supply to Poland and Bulgaria and is trying to force the EU to adopt  its new gas payments system in Russian Rubles. On Wednesday this week, ECB President Lagarde had a speech whereby she highlighted the difficulty that the Euro Zone is going through since the war between Ukraine and Russia began, she has pledged with the people of the EU and the world alike to not dwell in fear but to essentially trust in her leadership to steer the ship well through rough tides.

Technically:
Unlike the Dollar, the Euro weakened against rand. The EURZAR fell from R16.93/€ to a low of R16.69/€ . The pair has been in a position of consolidation. The market may likely be cooling down before it breaks through to the upside. Should the pair break R16.99/€, we may see the pair extend to R17.38/€ next week.

uk markets

Regarding the Russian-Ukraine war, about 8,000 British soldiers are due to be sent to mainland eastern Europe to assist combating Russian aggression and are expected to be there till June. A lot of British businesses are under threat of going under due to high inflation, as many struggle to pay off Covid-19 loan repayments. Construction and hospitality industries are the most affected. Another factor as to why businesses are struggling are due to lower buying power of consumers as household commodities sky rocket in pricing.

Technically:
The sterling has slightly weakened against the rand this week falling from a high of R20.13/£ to a low of R19.80/£. The pair has formed a bullish flag on the 4hr chart, which is a strong bullish pattern. With this in mind, should the pair break R20.17/£, we can expect it to stretch as high as R20.70/£ next week.

Technical levels to watch for the upcoming week: