ZAR and Local Index Analysis:
- Resurgent dollar causes USD/ZAR[1] to trade above prior day low however, more is needed to reverse the strong medium-term downtrend
- The JSE Top 40 Index recovers from recent low after spate of corruption allegations weigh on sentiment
- Upcoming data to provide more insight into the speed of the US recovery: Initial jobless claims, ISM figures and NFP data[2].
ZAR Volatility Set to Continue Amid Dollar Resurgence and Covid-Related Corruption Allegations
South African President, Cyril Ramaphosa, addressed concerns around the recent allegations of Covid-related corruption within the ruling ANC party in an open letter where he addressed the liberation movement as “Accused number one”.
Companies with connections to high-ranking government officials and senior members of the ANC have been awarded lucrative contracts to provide essential personal protective equipment (PPE) and related supplies. This was one of the issues discussed at the party’s National Executive Committee meeting where it was recommended that members charged with corruption must step aside from official positions, according to reports.
USD/ZAR Daily Chart: Downtrend Remains for Now
Chart prepared by Richard Snow[3], IG
The South African Rand (ZAR) has experienced a decent run of strength versus the US dollar[4] despite periods of increased volatility in the last four trading sessions. Price currently trades below the 200 day simple moving average[5] – hinting that Rand strength may persist - while the moving average convergence divergence (MACD) indicator[6] has not yet indicated any clear signs of a reversal. The 16.3358 remains the next level of support should the trend continue lower.
Learn about these and other useful technical indicator via our Technical Analysis[7] section of the Education section
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