South African Rand Outlook: Global Sentiment Continues To Govern ZAR

USD/ZAR DAILY CHART

USD/ZAR daily chart

Chart prepared by Warren Venketas, IG

The Rand is trading higher against the US Dollar today in spite of the gloomy local outlook. A short-term diagonal resistance (red) has emerged which could provide an upward push if broken above. For now, further downside is supported by global factors with 16.1000 as initial support.

SCHEDULED HIGH IMPACT EVENTS LIKELY TO OVERSHADOW CHAOTIC WEEK

The rest of the day includes Balance of Trade figures for South Africa (12:00GMT) while the US is set to release Core PCE Price Index (12:30GMT) and Consumer Sentiment (14:00GMT) data. It is unlikely these will cause major price action on the USD/ZAR pair but any major variation from estimated values may result in a significant swing.

DailyFX economic calendar

Next week is riddled with various economic events but also the most anticipated event of the year according to many market participants - the next US President of the United States will be announced. Lots to look out for over the coming days which makes following news events and announcements imperative for USD/ZAR trade strategies.

USD/ZAR: KEY POINTS TO CONSIDER MOVING FORWARD

The Rand remains undervalued according to the PPP model and preferred by global investors for the appealing carry. This sentiment may change going into a period of higher expected volatility and possible uncertainty of announcements. This could lead to investors shying away from high beta assets such as the Rand in favor of safe-havens. This is yet to be decided and largely dependent on outcomes next week. Local news and announcements will probably remain underrepresented within the USD/ZAR pair with systemic US fundamental factors sure to remain at the forefront of price action.

Key points to consider:

  • US stimulus negotiations
  • Falling wedge pattern
  • Expected rise in volatility
  • Next week’s South African data
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