The Weekly Round Up - 2020-10-16

In our weekly round up this week, we look at some important data released and the affect this has had on the currency market.

USD/ZAR

To the rand’s fortunate and favor, the dollar has remained weak and on the edge of uncertainty with decisions around US stimulus and the Presidential race circling in unpredictability.
The start of the week held hopes of a $1.8 trillion stimulus package coming to fruition, however as of today it is clear that a package may not be cemented until after the elections.
The US economy is perceived to be in a weak state with demand low and industries suffering while the stimulus deal remains delayed.
Key market moving influences will lie in the progression of the US Presidential race.
Technically – USDZAR traded at a average of around R16.50/$ this week, with the ceiling remaining unbroken at a high of R16.72.

EUR/ZAR

The euro traded solidly in the middle of our predicted range for the past week, struggling to break out of its stoic 30 cent range between R19.30/€ and R19.60/€ .
Speculative approaches are being adopted by market players as infections rise across Europe.
Harsher lockdowns are being initiated as schools are being closed, non-covid hospital procedures are being restricted and social activities halted.
Winter in the Eurozone with covid-19 is bringing to light a fickle business cycle and historic bond yield lows, thus providing investors with much to worry over when bidding for the euro.
Technically – while a support level of R19.35/€ has formed on the bottom end, the EUR needs to break R19.56/€ and R19.62/€ before we can see highs near the R19.70/€ mark

GBP/ZAR

New week but same struggles facing the pound, namely Brexit and a second wave of the coronavirus.
Low growth in the UK is being fueled by approaching harder lockdown restrictions.
While speculation over when quantitative easing will be introduced is beginning, this before the nearing possibility of much discussed negative rates is considered.
Technically – GBP followed our predicted range in last weeks round up to the ‘T’, ranging between R21.26/£ and R21.67/£ . A sturdy resistance level is holding the sterling beneath R21.76/£.

South African Rand

For the past four days the rand’s price action wavered in conservatively tight ranges, we kicked off the week with a dollar holiday and then saw absence of any large impulsive moves beyond that.
The event of the week can be awarded to yesterday’s economic recovery plan given by president Ramaphosa.
The prospective plan of action to drag the nation out of its current slump is being hailed as being “wishful”, with Ramaphosa pledging to build a new economy based on “fairness, justice and equality”.
Focusing on employment stimulus, infrastructure investment and an extension for the special social grant.
Technically – with the rand having weakened after digested the recovery plan, we expect USDZAR to trade between a low of R16.34/$ and a high of R16.85/$; straddling a support of R16.64/$.