Healthy SA Data Tries to Ease Rand Pain

RAND TALKING POINTS & ANALYSIS

• Hawkish US data has overshadowed optimistic SA releases.

• Fed officials under the spotlight today.

• Trendline support in question as trade week draws to a close.

USD/ZAR FUNDAMENTAL BACKDROP

The South African rand has been swiftly depreciating against the USD since September and although there has been some positive South African specific economic data comprising PPI, GDP, PMI, balance of trade and business confidence, US factors have outweighed any local influences. Today’s consumer confidence (refer to economic calendar below) and current account figures beat estimates providing some encouragement in what has been a tough year for South Africa with the rand attempting to claw back some lost gains. Unfortunately, this optimism has been marred by escalating ‘loadshedding’ in the country (now at Stage 6) that is disrupting business activity.

From a US perspective, weekly jobless claims data once again reiterated the robust US labor market citing a miss on initial jobless claims. Couple this with yesterday’s ISM services PMI report, the probability of another Fed interest rate hike this year is growing and could result in more pain for the ZAR.

The US trading session will be rife with Fed speak and will likely provide some volatility throughout USD crosses including USD/ZAR.

ZAR ECONOMIC CALENDAR (GMT +02:00)

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

USD/ZAR WEEKLY CHART

Chart prepared by Warren Venketas, TradingView

Weekly USD/ZAR price action above is trading at a key inflection point around trendline resistance (black). The week’s close will be of utmost importance for short-term guidance with a close below favoring subsequent downside and vice versa.

USD/ZAR DAILY CHART

Chart prepared by Warren Venketas, TradingView

Focusing in on the daily chart, yesterday’s long upper wick candle could hint at a potential pullback lower with the 19.0000 psychological handle serving as the first zone of support.

Resistance levels:

– 19.5000

– 19.1522

Support levels:

– 19.0000

– 18.7759

– 18.5000/50-day MA (yellow)

Contact and follow Warren on Twitter: @WVenketas