The Dollar remains weak compared to other developed markets, giving way for the Rand to shine but the questions remains, for how long?
Eskom continues with load shedding to prevent a national blackout.

USD/ZAR News

American Markets
CPI data in the United States takes the trophy of events this week. Consumer prices rose a great deal faster than expected in May, to 5%, from a year ago. The largest annual breach since 2008! Market expectations were coming in around 4.7% so this data adds to fuelling concerns from already nervous investors that America is under the burden of inflation pressures, as the economy echoes strength after the pandemic. To put this in a way that could be better understood, investors are trying to determine if higher prices are just temporary in the U.S. or could this be long term? If inflation continues to rise, the economic pressure will be too much for Americans and the largest economy will see a slowdown and contraction in growth. Employers in the U.S. are hesitant to lay off workers and we see that with the jobless claims that fell yesterday, this is a sign of economic improvement with the labour market having high hopes of increased consumer demand.

Technical direction forecast:
Following the downward channel per our image below, we can see there is a lot of selling pressure with this currency pair hence we see USD/ZAR trading at R13.57/$ now. We do sustain the opinion that the Dollar is likely to gain some ground over the course of next week and could move the pair to the top of the channel around R13.87/$ or testing higher.

EUR/ZAR News

European Markets
In line with expectations, the European Central Bank kept interest rates unchanged yesterday. The latest economic data, has signalled a rebound in manufacturing & a pick up in consumer spending. The VP and President of the ECB confirmed that while economic prospects are improving, a sustained rise in market rates could translate into a tightening of financing conditions for the economy and against that background, they will continue their very accommodative monetary policy stance. The ECB confirmed it will continue buying bonds as part of its PEPP until it judges that the crisis is over and this could go on until March 2022.

Technical direction forecast:
Investors want more information on when the very accommodative stance from the ECB will stop! With all time low interest rates, it is evidently affecting investors and traders pockets. Technically the EUR/ZAR pair is trading at R16.52. The pair is also in a downward channel but could trade toward the top of it in the week to come possible finding support around R16.75 to R16.93.

GBP/ZAR News

UK Markets
Just in – Positive GDP data for the UK as the economy boasts 2.3% growth in April. The UK’s Health Secretary of State confirmed this week, more than 90% of Coronavirus cases in the UK are the Delta variant. Proving the variant which originated in India is spreading swiftly. With the United Kingdom far ahead with their vaccination program, markets are expecting the UK to announce whether it will be moving forward, with plans to fully lift the Covid restrictions on the 21st of June. Any positive news on this front will strengthen the Pound.

Technical direction forecast:
The UK economy is blooming as more shops and restaurants open up. With such great signs of economic recovery, we can see the Pound’s strength as the GBP/ZAR pair is currently trading at R19.20. Still following a downward channel since the 6th of May, the pair’s range could be anywhere from R19.00 to R19.40.

South African Rand News

South African Markets
The SA Rand held ground this week after higher than anticipated GDP data. The country had a strong first quarter and the Rand could in fact be the world’s top performing currency this year so far. Let’s not get into our fiscal deficit for now though. SA importers can continue to trade & make foreign payments below R14.00/$ whilst the Dollar weakness runs its course. After the disappointing inflation data released from the U.S yesterday, we can only hope to see these current levels continue for the week to come. President Ramaphosa has been invited to the G7 Summit this weekend and is hoping to bring in more foreign investment into SA which will also be quite positive for our markets to see some capital inflows. South Africa is unfortunately still facing the failing SEO crisis as Eskom continues load shedding to avoid a national blackout. Maintenance on the grids are taking longer and units are down which need to be serviced back to life. South Africans aren’t happy about load shedding in winter however Eskom has made it clear that this will be an unfortunate reality for years to come. Should load shedding continue or get worse, we might see Small Business start to suffer from the effects.