News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • We ended this past week with another cliffhanger. The $SPX teeters on the edge of a breakdown from the post-pandemic recovery. While we have NFPs and other key data ahead, the markets are likely to remain fixated on yields. My outlook for next week: https://www.dailyfx.com/forex/video/daily_news_report/2021/02/27/SP-500-Dollar-Reversal-Hinge-Not-On-NFPs-but-Markets-Risk-Imagination.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/mlNDDyTgex
  • Make smart trading decisions with your free guide to trade the news. Download your free guide here.https://t.co/pb5E2KgRzW #DailyFXGuides https://t.co/70ZOJ0ZMwF
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/SyroornFf5
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4QhQGQ6 https://t.co/KrMcyZZqO7
  • The Reserve Bank of Australia (RBA) rate decision may spark a bullish reaction in $AUDUSD as the central bank is expected to retain the current course for monetary policy. Get your market update from @DavidJSong here: https://t.co/WbcR9ER0qT https://t.co/TynsqCtPQ6
  • Gold has broken below a critical support confluence we’ve been tracking for months now and the risk remains for further losses while below this threshold in the weeks ahead. Get your $XAUUSD market update from @MBForex here:https://t.co/xgN2obaIWR https://t.co/H71ufPNkPg
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/Evr5KgUjVo
  • $GBPUSD corrects from stretched valuations, however, positioning clear is likely to entice dip-buyers. Get your market update from @JMcQueenFX here: https://t.co/sfFdBx9pN6 https://t.co/j6nnry65SW
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/oQrOpYINOj
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/LSVPlus0vv
SARB Likely to Retain Repo Rate on Stable CPI and Fiscal Reports

SARB Likely to Retain Repo Rate on Stable CPI and Fiscal Reports

Rob Pasche, Kara Dailey,

Talking Points:

  • International Liquidity position declines (-$286 million) alongside FX reserves (-$244 million)
  • CPI remains steady at 5.9% within the targeted range
  • Reserve Bank likely to hold interest rates at the current level of 5.75%

Recognized to not only maintain exchange rate targets, but also provide liquidity in times of financial strain, foreign exchange holdings have increased five-fold since 2002; holding too few may thus pose a challenge. Conversely holding too many reserves can be a liability on the balance sheet, as funds could have otherwise been invested in higher yielding instruments.

South Africa currently leans toward the former scenario with reserve holdings relatively low at 15% of GDP. If reserves continue to decline as they have in October, and US interest rates rise, then South Africa will likely be forced to raise rates in order to remain competitive in terms of global money flows. However, given the uncertainty surrounding the Fed’s rate hike timing as well as a positive domestic financial stability review and CPI report, rates will likely remain unchanged at tomorrow’s MPC meeting.

According to the IMF’s COFER Data (Currency Composition of Official Foreign Exchange Reserves) global FX holdings stand at $12 trillion after growing 7.8% in the six months to June. Contrary to this global trend, South Africa’s foreign exchange reserves fell by 286 million dollarsbetween September and October. Furthermore gold reserves were down 163 million dollars as was South Africa’s international liquidity position which declined 244 million dollars. Despite having fewer reserves with which to influence policy, South Africa’s Financial Stability Review concludes that the country’s financial institutions remain sound enough to contain systemic risk.

South African banks are reported to have adequate levels of capital with a capital to risk weighted assets ratio of 14.6%, well above the required 10%. Furthermore, housing prices remain fair and the household debt to income ratio continues to improve. However, it is important to note that equity is overvalued and a sharp correction could negatively impact the financial system. Additionally if interest rates do rise in the near future households will face the pressure of higher lending costs.

In addition to a sound financial stability report, CPI for the month of October was reported steady at 5.9%. The largest increase came from the alcoholic beverage index which increased 1.9%. Further aide came from the transport (+0.3%) and food/non-alcoholic (+0.2%) sectors. With an average price increase of 0.2% and CPI within the 3-6% target the Reserve Bank of South Africa will likely hold the repurchase rate at the current level of 5.75%.

There is a long term bullish price channel for USDZAR that is intact, but R 11.40 is proving to be a difficult price level to break. The wedge formed between R 11.40 and the lower trend line will break sometime in the next 4 months and could set the tone for the next major move in USDZAR. We have a bullish/neutral stance on the pair until price breaks below the price channel or above R 11.40.

USD/ZAR Weekly Chart

dailyfx usd/zar weekly chart.

Chart Created By Rob Pasche Using MarketScope2.0

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES