overview

Price action will be muted today with several nations already experiencing public holidays.
The dollar is on the front foot against the rand as we move into the new year, USDZAR set to close 2021 near R16.00/$.

The dollar remains at stable elevated levels as trading thins out with Japan and Australian markets already closed for New Years eve.
Initial jobless claims fell in the US which is dollar positive and shows the labour markets has been unaffected by the new variant.
Locally, curfew has been lifted after almost 2 years with time restrictions – the motivation behind this is that our fourth wave has shown high transmission but low hospitalization.

Technically:
Trading will resume next week with volumes returning to somewhat normal levels, we may see the dollar positive data being digested and have USDZAR retest against and above R16.00/$.
If risk appetite returns then we may see the pair return to the bottom of our channel around R15.75/$, followed by a R15.60/$ if this breaks.

The bias in still in the dollar’s favour as we move into the new year with the US producing strong economic data, risks of omicron affecting investor sentiment against emerging currencies and the Turkish lira’s fall damaging a basket of currencies like the rand.

The euro is expected to remain under pressure as the ECB takes criticism for their monetary policy which stands in contrast to the US Fed’s.
Yesterday ECB officials highlighted inflation fears and difficulties to returning to normal policies. Positive data in the US is anticipated to undermine the euro’s strength when it comes to the EURUSD, however the euro remains firm against the rand.

Technically:
EURZAR is staying afloat at a support level of R18.00/€, the pair failed to break higher than R18.12/€ this week and is likely to range between R17.90/€ – R16.05/€ for the day. With a larger spread expected next week between R17.70/€ and R18.20/€.

Boris Johnson praised the Covid-19 vaccine programme for placing the UK in an ‘incomparably better’ position.
Although daily cases remain at historic highs in the Kingdom, despite this bans in countries like France have been removed for UK nationals which helps improve investor sentiment.

Technically:
Despite thinner volumes this week, the Sterling was an example of the fact that volatility is still very much a factor in the markets.
The pound surged to 4 week highs against the rand and buyers are in favour of the pound while it nests above R21.30/$ for support. Next weeks range is expected to move between R21.25/£ – R21.50/£.