The Weekly Round Up - 2020-10-23

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
The dollar’s price action and market sentiment has become synonymous with the US elections and stimulus relief talks, this week was a typical illustration of these associations.
Fluctuation on the greenback saw USDZAR straddling the R16.55/$ level as it has for the past three weeks, however the bears claimed dominance this week with a decline of dollar strength leading to today’s level around R16.20/$.

Anxiety over the US presidential election has kept investor bids cautious, however as outlined in our daily reports – a trend proved common in that when US stimulus talks stall then we see investors cling to the dollar for safety, as opposed to progress in talks increasing investor appetite towards riskier currencies.
Last night’s final debate added oomph to the dollar with a firming occurring as investors close out positions and refrain from new bids before the elections, however stimulus bets still keep the greenback fickle.
Technically – USDZAR broke downward through support levels of R16.53/$ and R16.41/$, bar an upward correction USDZAR may now find itself between the resistance line of R16.32/$ and support of R16.15/$.

EUR/ZAR
The plight in Europe hasn’t eased as increased infections continue to persist, causing a negative impact on the euro.
Dollar socio-political factors are viewed to be weighing down on the eurozone currency as well, this as hesitation of a stimulus injection erodes the possibility of market players diving into other currencies with increased hazard.
Favor towards the downside has presented itself on the euro as it has slipped a further 0.1% against the dollar.
Technically – we traded firmly within last week’s prediction of EURZAR, now falling towards the bottom end and creating new monthly lows. Having shattered R19.47/ € and R19.30/€ , thus see’s a support line form at a low of R19.13/€ while we watch to see if the euro will firm or challenge this bottom line.

GBP/ZAR
The pound started the week off digesting the negative sentiment around the result of Moody’s rating agency knocking the UK’s debt rating from Aa2 to Aa3 following an increase in the nations debt levels.
Brexit once again took center stage with prospective talks and markets feeling optimistic over an expected positive outcome, resulting in Wednesday and Thursday producing highs on GBPZAR of R21.54/£.
The EU’s Chief negotiator informed the media that an agreement is within reach and the UK just signed its first post-Brexit trade deal with Japan which is pound positive, however dollar coercion will likely keep the queen’s currency stunted.
Technically – GBP also filled our predicted range wholesomely, ranging between R21.55/£ to this morning’s breakout lows of R21.22/£ . The pound may now challenge the next support of R21.16/£ as it steadily ranges in a downward trend.

South African Rand
This week the rand has advanced against its pair counterparts taking advantage of emerging market spurring with US economic data and news shifting investor motives.
Expectations are rife that a technical rebound is awaiting the rand, however one certainty remains and that is next week will seep volatility.
The economic event of the month for the rand will take form in the postponed medium term October budget speech on Wednesday.
This speech is anticipated to be drastic and not a crowd pleasing talk, with action directed towards amended tax measures and whether we will see a zero-rated budget format approach.
The impact of the budget speech will likely be adverse as our situation speaks for itself with little light at the end of the tunnel.
The current fragile dollar may play to the rand’s advantage, keeping any negative losses in the short term before focus shifts again to US elections and stimulus.
Technically – The current lows can dissipate quickly if the budget speech is received negatively, a high of R16.72/$ may be seen with support R16.43/$ forming later in the week.