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USDZAR

South African Rand Follows ThroughThe Financial Post had the following to say to try to explain the fresh strength in the South African rand (USD/ZAR): "With the local economy remaining weak and facing power cuts, the rand’s recent rally has been mainly on the back of global factors, including higher commodity prices which benefit resource-rich South Africa and expectations U.S. lending rates will stay lower for longer." This explanation falls well short of the longer-range dynamics benefiting the rand on this foollow-through move for a longer USD/ZAR downtrend. Commodity prices are soaring, and South Africa is a direct beneficiary. More importantly, the South African central bank expressed great confidence in the economy in mid-April. I posted the following at the time including key economic charts: South African Rand Boosted By Central Bank Confidence Last November, the South African rand (USD/ZAR) finished reversing its pandemic related losses against the U.S. dollar. Along the way I pointed out the benefits of getting long the South African rand. This week, USD/ZAR dropped to levels last seen in January, 2020. The rand looks to strengthen further based on the confidence expressed by South Africa’s Reserve Bank Governor Lesetja Kganyago in a recent Reuters interview. In the interview, Kganyago expressed confidence that investors will remain interested in buying high-yielding South African bonds even as monetary policies start to normalize (higher rates) around the globe. Moreover, South Africa enjoys a real rate advantage over other emerging market countries given South Africa’s success in containing inflation. Higher bond yields attract capital inflows and boost the domestic currency. The following quote convinced me of Kganyago’s determination to contain inflation: “High inflation perpetuates inequality..Those who are rich can buy assets to protect themselves from inflation, they can buy shares and bonds and property. But those who are earning fixed incomes, whether a salary or a government social grant … if inflation erodes it you have to wait for the next increase.” The South African Monetary Policy Forum The Reuters interview likely came after the Reserve Bank released its April report monetary policy (the “Monetary Policy Forum”): the commentary in the interview supported themes from the report. The report reflected Kyganyago’s confidence. For example, here are some of the Reserve Bank’s main points: Global recovery stronger on vaccination & stimulus Domestic recovery on track, some sectors constrained SA inflation well-contained… balanced risks Gradual normalization with low inflation {The South African Reserve Bank is confident in a future of well-contained inflation.} I was most impressed with the strength in South Africa’s terms of trade. The country’s terms of trade broke out in late 2019 and has trended sharply higher since then. The trend managed to to stay strong through the pandemic with a slowing in Q4 of 2020. This overall strength bodes well for the post-pandemic recovery in South Africa. {The prospects for the South African economy look good with an uptrending terms of trade.} The Trade in the South African rand The strong terms of trade particularly support a strong currency with surging commodity prices leading the way. Combining with a high yield, the South African rand is an attractive currency trade. I missed the last round of downward pressure on USD/ZAR, but I am on alert to fade the next bounce. Ideally, I can start a new position short USD/ZAR on another test of declining resistance at the 20-day moving average (DMA) and/or the 50DMA. Be careful out there!
Short
by drduru
USDZAR updateI may be forced to change my view of a drop towards 13.20 if the pair fails to close this week below 14.00. A break above the 30-day MA rate of 14.25 will allow the pair to move into a range between the 200-week MA rate of 14.55 and the 61.8% Fibo rate of 14.51. A close above 14.51 will invalidate the move towards 13.20. The MACD indicator is working into a wedge which shows that the rand's run is maturing and their is clear bullish divergence on the RSI indicator. For now we remain in a tentative range between 14.00 and 14.20.
by GustavFourie96
1
USDZAR 14.28480 + 0.17 % LONG IDEA * PRICE ACTION & STRUCTURE HELLO EVERYONE HOPE EVERYONE IS DOING GOOD HAVING A GOOD ONE IN THE MARKET THIS WEEK, HERE'S A LOOK AT THE DOLLAR / ZAR . * follow your entry rules on entries * significant moves with the bears change the plan. lets see how it goes. many stars must align with the plan before executing the trade, kindly follow your rules. HAPPY TRADING EVERYONE & LET YOUR WINS RUN... _________________________________________________________________________________________________________________________ ENTRY & SL - FOLLOW YOUR RULES RISK-MANAGEMENT PERIOD - SWING TRADE __________________________________________________________________________________________________________________________ If this idea helps with your trading plan kindly leave a like definitely appreciate it.
Long
by PULEMokhothu
USD / ZAR * TECHNICAL BREAKDOWN SWING IDEA STRUCTURE & PRICE ACTHELLO EVERYONE HOPE EVERYONE IS DOING GOOD HAVING A GOOD ONE IN THE MARKET THIS WEEK, HERE'S A LOOK AT THE DOLLAR / ZAR. * LOOKING AT THE DOLLAR ZAR FROM HIGHER T/F LOOKING FOR DIRECTION, STUCTURE & SENTIMENT WE SEE THE PAIR HAS BEEN TRADING IN AN ASCENDING CHANNEL RESPECTING STRUCTURE TO AN EXTEND. * POSSIBLE SCENARIO 1 - WE COULD SEE A BREAK BELOW / FAKE OUT TESITING SUPPORT LEVEL 11.53256, OR SCENARIO 2 - STRUCTURE WILL HOLD AND WE'LL SEE THE DOLLAR REGAIN STRGHTH AGAINST ZAR. ONLY TIME WILL TELL * follow your entry rules on entries * significant moves with the bears change the plan. lets see how it goes. many stars must align with the plan before executing the trade, kindly follow your rules. HAPPY TRADING EVERYONE & LET YOUR WINS RUN... _________________________________________________________________________________________________________________________ ENTRY & SL - FOLLOW YOUR RULES RISK-MANAGEMENT PERIOD - SWING TRADE __________________________________________________________________________________________________________________________ If this idea helps with your trading plan kindly leave a like definitely appreciate it.
by PULEMokhothu
A differnt perspective on the value of the randAccurately and reliably forecasting a currency is near impossible, however, its easy to have an opinion. The question is, what do you base your opinion on? As a South African, I follow the rand closely, particularly against the US dollar and the pound. One can use a purchasing power parity (PPP) or real effective exchange rate (REER) chart to calculate a "fair value" through analyzing the numbers. But the rand has everything to do with sentiment and the global economy and very little to do with the South Africa economy. I put this chart together to try and understand the rand from a global context. Assumption: there is a high correlation between the price of gold in US dollars and the M2 money supply. The chart shows the M2 money supply in orange compared to the price of gold in rand terms which is shown by the blue line. We can see that the two lines have significantly diverged from each other over the last 8 months. If we assume that the M2 line will only ever go up and can never revert down, then we can assume that the price of gold in rand terms must also go up over time, all else being equal. It would therefore stand to reason that the price of gold in rand terms is in a cyclical low and may suggest an attractive entry point. What about the correlation between the price of gold in rand terms vs the rand dollar exchange rate? The green line shows the rand dollar exchange rate in comparison to the price of gold in rand terms. It's evident that there is a high correlation between the two however, the the divergence between the two particularly over the last 2 years, shows the real appreciation in the price of gold. So where does that leave us? The assumption that the price of gold in rand terms is correlated to that of the M2 money supply, suggests that the price of gold in rand terms needs to increase. The correlation between the price of gold in rand terms and the rand dollar exchange rate suggests that the rand needs to weaken or depreciate over time. Makes sense? I therefore ask the question as to whether the denominator that one should also follow over time is actually the direction of the M2 money supply in relation to the rand? This also backs into monetary policy in the largest economies and the US in particular. It stands to reason that the rand is far to strong at these levels if the world continues to print money? Its not sustainable! Thoughts? Please like and follow for daily posts on various asset classes. Please also share your views on the trading ideas and whether or not you find them to be of any value to you as a trader. Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.
FX_IDC:XAUZAR
by JesseMorgans