RAND TALKING POINTS & ANALYSIS
- Chinese data & US retail sales pull investors away from the rand.
- Fed speakers in focus later today.
- Negative divergence may point to upcoming downside.
Trade Smarter - Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
USD/ZAR FUNDAMENTAL BACKDROP
The rand has been on the backfoot from early this morning after concerns around the Chinese economy grew when the PBoC decided to unexpectedly cut interest rates. South Africa being so closely associated with China in terms of commodity exports, the South African rand naturally weakened against the greenback.
Emerging Market (EM) currencies as a whole have been selling off as risk sentiment soured after Russia/Ukraine tensions escalated. The trend was further exacerbated by the devaluation of the Argentinian peso that increased demand for the safe haven USD.
Foundational Trading Knowledge
Macro Fundamentals
Recommended by Warren Venketas
JP MORGAN EMERGING MARKETS CURRENCY INDEX
Source: Refinitiv
South African unemployment (see economic calendar below) surprised to the downside hitting lows last seen in Q4 2020 with the Eastern Cape (39.7%) holding the highest official rate nationally and the Western Cape the lowest (20.9%).
US retail sales provided a boost to dollar bulls with actual numbers beating forecasts which will place further pressure on the Federal Reserve as to maintain a tight monetary policy stance for longer. Markets will look to get further guidance from the Fed’s Kashkari this evening as to the outlook considering the recent US economic data.
USD/ZAR ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX Economic Calendar
TECHNICAL ANALYSIS
USD/ZAR DAILY CHART
Chart prepared by Warren Venketas, IG
Daily USD/ZAR price action surpassed the July swing highs today; however, the corresponding Relative Strength Index (RSI) levels show opposing levels indicative of bearish divergence. Taking this into account, there may be a pullback to come which will require a fundamental catalyst to drive the move.
Resistance levels:
- 19.5000
- 19.3453
Support levels:
- 19.1522
- 19.0000
Contact and followWarrenon Twitter:@WVenketas
