US Economy Experiences Deepest Contraction In 75 Years and ‘Robinhood’ Forum Groups Target Hedge Funds.

USD/ZAR News

Data this week emphasized that 2020 is without a doubt was a cataclysmic year, as it brought the largest annual decline in the US economy since 1946. A very rocky week in the markets with investors shifting to the slightest announcements of news. In such an unstable environment, market players moved to the dollar as a safe-haven thus seeing the USD perform well this week. Wall street has been shaken by an ‘attack’ from organized online forums pushing stocks to rise that hedge-funds initially went short on. As a result brokers had to stop borrowing facilities and restrict trading with surging stocks like GameStop. This play by these ‘Robinhood’ minorities showed the power of social media in the financial markets.

Technical direction forecast

USDZAR moved over 1.5% this week in an upward path as we are seeing a very brief rising trend form amidst the ‘bigger picture’ of a downward trend. We forecast 2 possible outcomes for next week :

Option 1 (Green Line) – this path is dependent on a break and close above R15.30/$, should this upward break occur then we expect to test R15.44/$ then possibly R15.59/$ or higher.

Option 2 (Red Line) – this may see USDZAR fail to break the top end of our trend and remain in the current channel, trading sideways and testing R14.93/$.

EUR/ZAR News

European opinions are beginning to circle around the possibility that this pandemic may set up Europe and the world for new horizons and a Neo-renaissance. However before the Eurozone gets to that better place they still have to overcome business closures, drops in foreign direct investments and traumatized citizens. Sentiment from consumers, industries and overall economy related facilities has improved in Europe despite the given challenges.

Technical direction forecast

EURZAR is also experiencing a short-term upward trend that may become a long-term trend should we break R18.60/€.

Should next week end up very flat then we may straddle R18.30’s on EURZAR.

GBP/ZAR News

A UK study has shown that the covid-19 variant which was discovered in SA may have similar levels of transmission and can be combated with the current available vaccines. The UK has approved a new visa for Hong Kong nationals and expects almost 3 million citizens may be eligible – they will be able to apply for settlement and citizenship after 5 years.

Technical direction forecast

The pound is expected to sore after overnight optimism about vaccines and UK studies on vaccines efficacy. GBPZAR may break R21.00/£ should the emerging markets continue to be shunned by investors.

South African Rand News

The rand suffered this week and lost ground against the majors as investors pulled out of emerging markets to seek a safe-haven dollar. Fundamental movements in the markets may have seen the rand break lower against majors this week, but these past few days have seen positions being altered due to anxiety and uncertainty in the markets. Late on Wednesday saw the IMF cut our economic growth forecast from 3% to 2.8% – this gloomy slash was accompanied by grim statements on how expectations are that our economy may only reach pre-pandemic levels in 2023. Keep in mind that our pre-pandemic economy was still one of the most dire financial situations of our history and once we return to that we will still have a lot of work to do to dig our nation out of a myriad of problems.