– ZAR are leading and emerging competitors on multiple horizons.
– As SA bonds attract demand and the market is reevaluating the outlook for EUR / USD.
– USD / ZAR is supported at 14.39, but failure opens the door to 13.87.
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- GBP / ZAR spot rate at time of writing: 19.97
- Bank transfer rate (indicative): 19.92-20.06
- FX Specialists (indicative guide): 20.33-20.50
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Rand has outperformed all major developed and emerging market competitors on multiple time frames, pushing the key USD / ZAR support, which is the latest technical hurdle to more than two-year highs of around 13.87 for the South African currency.
The Rand was marginally lower than the Polish zloty, but otherwise posted gains over all of its major developed and emerging market peers during the day, month and 2021, amid continued outpacing gains in the South African currency.
Some analysts described South Africa’s outstripping performance as bizarre given the lack of an obvious domestic or international catalyst for its strength, which coincided with heightened optimism about the outlook for the US economy and the recent bottoming of the euro dollar to date. April.
“Local stocks may not be as good as rand “says Nema Ramkelavan-Bhana, head of analytics at the company. Rand Merchant Bank.
Above: Rand performance against major developed country foreign exchange markets (left) and major emerging markets (right) in 2021.
Rand’s comparative performance has recently been supported by profit taking in some developed markets that may have benefited key “funding currencies” such as the euro, Swiss franc and Japanese yen, which were the only major currencies against which South Africa has depreciated. this week. …
“The rand reversed the trend in emerging markets, reflecting a 1.08% year-to-date gain. Modest, but meaningful, given the February chaos. SA’s current account performance remains favorable, as does the absence of unflattering local news, ”says Ramkelavan-Bhana.
Funding currencies rallied last week, while many of the previously popular commodities and economic growth, such as the Aussie and New Zealand dollars in the main currency and the Mexican peso and the Indian rupee in emerging markets, fell.
Weakness elsewhere in the developing world has also not hit South Africa’s government bond market, where prices have risen this month and yields have fallen on what some analysts say is strong international demand for the yield on offer there.
“Rand continues to trade well, fueled by robust risk sentiment, high commodity prices and SAGB inflows,” says Yulia Kryzhanovskaya, a trader at the company. Credit suisse at Notes on Thursday… “Tactically, the risk reward encourages buying USD / ZAR near support at 14.40 (YTD low) with a stop placed below that level.”
Above: correlation coefficients for USD / ZAR against the G10 currencies for one week (left) and one month (right). Shows the correlation of the rand with the euro’s gains last week, a response that could be nothing more than a mechanical default after EUR / USD stabilizes. Source: Ninjatrader LLC. Click each image to enlarge.
To the extent that last week’s Rand price action reflects the inflection point in the forex market and the dominant trends of 2021, Rand’s continued strength and resilience throughout may indicate a basic need or desire to rise further.
However, with the euro and yuan showing signs of bottoming out after a quarter of a decline, the South African currency may have little choice but to hope to rally against the dollar and pound if the total trade-weighted rand will continue to strengthen. …
China and Germany are South Africa’s first and second largest trading partners, while the US and UK are its third and fourth largest, while the currencies of the first two declined in 2021 and the currencies of the latter two rose sharply. But if the market’s appetite for the US dollars has faded, and the yuan has fallen quite strongly, then in the coming days, weeks and, possibly, months, the downward trend in USD / ZAR and GBP / ZAR is likely to continue.
“USD / ZAR is trading at December low of 14.5044 again, below which lies the key support at 14.3952 February low. We expect this price to continue this week. Otherwise, the 2011-2021 uptrend line at 13.8765 will be targeted, but then, “says Axel Rudolph, senior technical analyst at the company. Commerzbank…
Above: USD / ZAR shown at weekly intervals with Fibonacci retracements of the 2018 uptrend and long-term trendline. GBP / ZAR is orange.