Fxequity

Rand Testing Key Ranges as Focus Shifts to MTBPS


RAND ANALYSIS

  • Highlight on upcoming Medium Time period Finances Coverage Assertion (MTBPS)
  • Chinese language import and progress forecasts trying down.
  • USD/ZAR at key space of confluence.

ZAR FUNDAMENTAL BACKDROP

INAUGURAL MTBPS FOR FINANCE MINISTER ENOCH GODONGWANA

On Thursday 11 November the newly appointed Finance Minister Enoch Godongwana will ship the MTBPS (forecasted fiscal coverage outlook), watched carefully by native and overseas buyers alike. The depreciating state of the financial system has been considerably obscured by ballooning commodity costs leading to constructive present account figures (yellow) nevertheless, inflation (blue) has carefully adopted whereas the rand reveals marked positive factors in opposition to the U.S. dollar throughout the identical interval. This era of “enchancment” shouldn’t be mistaken for native/fiscal insurance policies however somewhat a biproduct of the exterior monetary market setting.

south africa cpi vs current account

Supply: Refinitiv

MTBPS: AREAS OF INTEREST

Present issues will revolve across the native energy utility Eskom (loadshedding) and different State Owned Enterprises (SOEs), fiscal spending, wage payments, authorities debt and the steps authorities need to take to advertise future economic growth. Mr Godongwana might want to reaffirm investor confidence by navigating the aforementioned challenges with dexterity and readability. events will sniff out any ‘beating across the bush’ which the Finance Minister ought to look to keep away from.

RAND-LINKED COMMODITY GAINS AT RISK

Earlier this week China launched it’s stability of commerce information for October (see calendar beneath) which revealed a constructive rise in exports however a lesser than anticipated import determine. Many components are at play however transportation delays had been of principal affect. The setting for this pattern to proceed is excessive as demand for Chinese language exports are more likely to stay elevated with festive intervals approaching world wide. From a Chinese language perspective, this could result in additional commerce surplus figures however South Africans exporters (and the rand) could really feel the pinch with lesser quantity of commodity exports.

China balance of trade data October 2021

Supply: DailyFX economic calendar

TECHNICAL ANALYSIS

USD/ZAR DAILY CHART

USD/ZAR daily chart

Chart ready by Warren Venketas, IG

The important thing 15.0000 psychological level coinciding with the long-term triangle resistance trendline (black) are going to supply necessary indication for the way forward for the USD/ZAR pair. A pointy flip off the 15.4289 50% Fibonacci resistance degree was adopted by a succession of key degree breaks. The short-term downtrend has been exacerbated by the weaker greenback after the Fed determined to not hike charges final week. The MTBPS ought to give some close to time period directional steerage however greenback influences will proceed to have important sway over the pair.

The Relative Strength Index (RSI) has pushed beneath the 50 degree which inspires additional draw back momentum and will convey the triangle help trendline and 14.5030 61.8% Fibonacci into consideration ought to the bearish momentum persist.

Resistance ranges:

Help ranges:

Contact and observe Warren on Twitter: @WVenketas





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