OVERVIEW

This week has been a rather quiet week in the markets, fortunately the silence has been in favour of the South African Rand as it has been strong against other currencies.

There has not been much volatility in the market this week for USD/ZAR as there has not been much economic data released to aggressively move the pair, the range has been R14.40/$ to R14.73/$ however the pair has been trading closely to the bottom of this range and gradually moving upward since yesterday afternoon.
It has been a tough week on the employment data front. Stats SA confirmed the dire state of SA’s unemployment, which is now at 35.3% however this wasn’t really market moving news. In the US yesterday, the initial Jobless claims data increased from 188,000 last week, to 202,000 this week. There is a high possibility that the Non-Farm payrolls that will be released today could show the job market slowing down in the US, which could affect investors views on the Dollar.
Oil has been a cause for concern globally, with many countries trying to make alternative arrangement due to sanctions. U.S President Joe Biden has ordered the biggest ever release of US oil reserves, up to 180m barrels of oil over 6 months as he steps up efforts to cool crude prices that are feeding in to high inflation. In efforts from South Africa to deal with the fuel prices, the government announced just yesterday that the general fuel levy will be lowered by R1.50 a litre from next week till the end of May, in hopes inflation will settle by then.

Technically:
The pair is in a downward channel and has touched the bottom of the channel. The pair found support this week at R14.50/$. As it stands, the greenback bulls may soon strengthen the Dollar. The pair may rise next week to hit levels of R14.89/$ as it forms a new level of resistance.

This week, ECB President Lagarde had a speech at the Central Bank of Cyprus on Wednesday and she concluded that Europe is entering a difficult phase. Lagarde made it clear that in the short term, there will be higher inflation and slower growth and that it is uncertain how long these effects may last for. The longer the Russian-Ukraine war lasts, the longer uncertainty will linger over the economy.
Talks between Russia and Ukraine are set to resume by video conference today. Russian President, Vladimir Putin said Russia would continue supplying gas to Europe even as it demands customers to pay in rubles. The European Union leaders plan to warn Putin’s key ally China, that it will suffer a blow to its global role if it offers support for the invasion.

Technically:
The pair touched resistance at R16.29/€ yesterday signalling that developed markets are coming back into investors risk radar. However, the Euro does stand to weaken again to recent lows being around R15.95/€ if the Rand keeps its gains for the foreseeable future but should it not, the pair could rise as high as R16.49/€.

The BOE is anticipating a 25 basis point hike in the interest rate in May or possibly a 50 bps hike. Short term data is said to warrant aggressive moves from the central bank to help curb inflation. The Pound has been on a major sell off against currencies across the board as there is a mismatch between what the market is looking for and what the bank intends to deliver. The Central Bank is concerned as well that if the war between Russia and Ukraine continue, the price at the fuel pump will continue to soar, affecting the purchasing power of consumers. Energy, food and other commodity prices have soared since the beginning of the Russian-Ukraine war.

Technically:
The pair found support at R19.00/£ this week and may likely not weaken much further than that unless something drastic happens in the markets. The pair looks like it is set to soar to as high as R19.55/£ next week.

Technical levels we are watching for next week: