USD/ZAR Analysis:
- Unrest remains prevalent in the province of KwaZulu-Natal – President Ramaphosa on the ground to assess damage to local communities
- USD/ZAR[1] retreats from significant 200 SMA as favorable yields and commodity prices buoy the local currency
- Record surge in Covid-19 vaccine registrations while new infections remain elevated
Unrest continues with KwaZulu Natal at the Forefront
The initial deployment of 2,500 army troops had little success in abating the looting and destruction of malls, vehicles and transport networks. However, the latest request for support could see ten times that number being deployed in hot spot areas around Gauteng and KwaZulu-Natal. Damages are difficult to assess but estimates have the figure around R16 billion ($343 million).
Key Technical Levels for the Week Ahead
The USD/ZAR[2] daily chart shows price action trading in what appears to be an ascending channel, bouncing between the upper and lower bounds. The most recent bounce off resistance[3] occurred right below the 200 simple moving average[4] (SMA) resulted in lower sustained movement which now approaches the lower bound of the ascending channel.
SA gold[5] and platinum miners no doubt have been enjoying the recent uptick in the respective metal prices and real yields remain favorable as South Africa continues to be well placed among its emerging markets peers.
The latest pullback may provide a launchpad for USD[6]/ZAR bulls as increasing US inflation, and tapering comments by the St. Louis Fed President Jim Bullard this week could bring forward expectations of an interest rate hike.
USD/ZAR Daily Chart
Chart prepared by Richard Snow[7], Refinitiv
Zooming in on the 4 hour chart, the ascending channel becomes clearer. If selling persists there could be a move closer
