USD/ZAR News

The Dollar has strengthened this week after months of consecutive losses.
Investors and market players adopted a wait-and-see approach leading up to The Fed’s meeting on Wednesday. Markets were pretty flat leading up to the key risk event and the complete opposite thereafter.
The Fed announced an expected unchanged rate decision. What seems to have the Dollar boosted though, is a projection of higher interest rates in 2023. Essentially, The Fed expects the economy to recover to pre-pandemic levels by 2023 which will then allow them soften their accommodative policies. In other U.S news, President Joe Biden signed a law making Juneteenth (19 June) a federal holiday to commemorate the end of slavery which he says will go down as one of the greatest honours he has, as president.

Technical direction forecast:
The USD/ZAR pair was following a downward trend since the 19th of March this year. The move after the Fed meeting broke the pair out of that channel and we can see a move toward R14.50/$ forming. Technically, we should see a retracement before a tick up so we are watching closely for any touch back to around a R13.87/$, however, important to note if the Dollar gets enough support, we could see a move to around R14.35/$ first.

EUR/ZAR News

The Euro, thankfully for us, is still trading below the R17.00 level but probably not for long. France has lifted the requirement to wear a face mask outdoors in public and will stop its curfews earlier than planned on Sunday, instead of 10 days later. This comes after good results and a great vaccine rollout in the city with over 58% of the France adult population vaccinated.
Staying on the euro, the ECB said on Wednesday, creating a digital euro could boost the currency’s international status by making it easier to use for paying or saving, Reuters reported. The EU commission has made it a goal to boost the euro’s use outside of the euro area. There is no official decision to proceed with it but it is definitely on the table.

Technical direction forecast:
The Euro is still quite weak remaining in the downward channel but trading a little stronger with sustenance from the USD, the weaker Euro is widely caused by the ECB’s stance on monetary policy which investors aren’t biting into. Remaining within the channel, the currency pair could trade a little higher next week reaching over the R17.00 mark.

GBP/ZAR News

The U.K recorded 11,000 new Covid-19 cases in one day, yesterday, this is the highest new caseload since February. Unfortunately this is a sign of a new wave caused by the Delta variant which seems to be a super spreader. UK inflation rose more than expected in May. The GBP is very strong and remains resilient against a basket of currencies however, the rise in inflation puts pressure on the Bank of England now to act on interest rates sooner.

Technical direction forecast:
The GBP/ZAR has broken out of the downward channel as we see below. On the top side, we could see the pair get to R19.87 but we can see support for the GBP/ZAR at R19.51.

South African Rand News

President Ramaphosa called a family meeting after a lot of speculation on Tuesday night. The increased restrictions at Level 3 lockdown are likely to be damaging on local businesses, especially SME’s. Restaurants have to close earlier and curfew is now at 10pm. This works against the Rand strength as economic recovery seems further and further away. A stronger Dollar also has a knock on effect on the Rand as we could see the petrol price increasing together with a hike on imported goods. The rise in Covid-19 cases come as no shock, the country expected a third wave in winter however there seems to be a lack of preparation for it. Hospitals in Gauteng are close to full capacity and Health Care workers are burnt out for the 3rd time. The vaccines are taking long to get to people and the centres have only this week allowed walk in’s for 60 years and older. On the electricity front, thankfully there has been no load shedding this week but South Africans know by now, that it can happen quicker than a blink of an eye.