In our weekly round up this week, we look at some important data released and the affect this has had on the currency market.
A ‘V’ Shape formation was seen this week on USDZAR – the greenback began the week extremely vulnerable having lost ground and touching lows of R16.09/$, only to recover and firm to current support around R16.30/40 level.
Positive data releases played in the dollar’s favour, as it was seen that the US economy grew at record breaking pace in the third quarter.
The effects of $3 trillion worth of stimulus being introduced into America increased circulation of money, however any further stimulus packages will have to wait as said by President Trumps chief economic advisor.
Technically – Next week’s election will inject a huge amount of volatility into markets, however we expect an easing prior to the result followed by a possible strengthening depending on the outcome. Strong levels remain firm at R16.50/$ and R16.20/$ with current support around R16.30/$.
EUR/ZAR
EURZAR touched 7 week best rates this week, having ranged within the bottom half of our forecasted range between R19.03/ and R19.31/ since Monday.
Markets in the Eurozone have been heavily effected by the introduction of lockdowns in nations like France and Germany as a second wave of a now mutated Covid-19 ravishes the continent.
Focus was directed towards whether the ECB would ease monetary policy however rates were left unchanged, although confirmation was given by ECB President Lagarde that more easing was on its way in December.
The Euro will likely see some influence in the form of bearish pressure next week from the US election outcome, as well as some stalling as we await announcement of a possible stimulus package.
Technically – Strong resistance has formed at R19.27/€, if this is broken we can see levels such as R16.35/ €. However with lockdown weighing in on Europe we may see more inclination towards support levels such as R19.12/ € and a low of R18.90/€ if we shatter downward.
Pound confidence suffered this week with the resurgence of coronavirus infections and consumer confidence dropping for the first time in half a year.
The IMF forecast that the UK’s GDP will fall 10.4% this year, and advise that monetary policy needs to support a vision of growth for 2021.
Focus on improving strength in the private sector and reducing public debt will take center stage before further fiscal support is introduced.
GBPZAR may lose ground toward the downside with a no-deal Brexit, Covid-19 wave fears and pressure from US election results.
Technically – GBPZAR landed smack-bang in our predicted range for the week, looking ahead we expect the resistance level of R21.40/£ to hold and support to be found around R21.18/£.
Our ‘Randela’ began the week with price action gearing up to be cautious with droves of month-end data, CPI announcements and monetary policy talks.
Two events held the rand’s movement hostage this week – namely, the reveal that President Ramaphosa had entered self quarantine and our Mid-Term Budget speech.
USDZAR began the week as expected with bearish momentum seeing the best levels since pre-lockdown.
The 7 month highs didn’t make it past mid week though, with a combination of our President’s quarantine announcement and the ‘mini-budget’ speech impacting the rand negatively, losing almost 1%.
The losses may have been worse if not for a weaker dollar and the current global environment softening the blows of local bad news and sentiment.
Technically – USDZAR seems set to trade around sub-16.40/$ until stabilization is seen from external factors like US election anxiety. We expect to trend within a channel of R16.55/$ and R16.20/$ until a break out would either lead to higher/lower levels
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EUR/ZAR · Low – Best Buy At 18.90. · Support – 19.18. · High – 19.38. |
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GBP/ZAR · Low – Best Buy 20.90. · Support – 21.17 · High – 21.40. |
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