Since we last checked in on the South African Rand (ZAR) in June 2021, the currency was appreciating toward multi-year highs of 13.37 ZAR per US dollar, previously not seen since January 2019. In the proceeding five months, leading up to the present, the USD has staged a comeback against the South African currency and is now level with the average exchange value for the first two months of 2021.
Some wild swings occurred during the revival in the USD / ZAR, with many value-overshoots forcing quick corrections. That is to say, bullish sentiment didn’t last long without a bearish retracement with this pair. For the most part, retracements have been hugging close to the Fib levels.
Risk sentiment will play a large part in the USD / ZAR. Last week saw traders pull away from safer currencies such as the USD, indicating a risk-on sentiment was prevalent in the market. Over last week, coinciding with the start of November, the USD depreciated by 1.427% against the ZAR, squeaking below the 15.000 precipice.
There are no hugely critical economic reports due from South Africa this week. However, next week the ZAR may be under pressure after announcing the Inflation rate YoY (October). Inflation is expected to increase by .2 percentage points to 5.2%, further pulling away from the South African Reserve Bank’s midpoint inflation target of 4.5%.
Next week, US economic data might be worth watching, including Inflation Rate YoY (October) on Wednesday and JOLTS Job Openings (September) on Friday. Inflation in the US is predicted to get as high as 5.8% in the October reading, up from 5.4% in September. The JOLTS Job Openings should hopefully show some sign that the tight labour market in the US is beginning to loosen.
Inflation data from outside the US should pique traders interest this week. Several major economies will be reporting on actual inflation figures experienced during September 2021.
Will they match their forecasted values, or will the data follow US inflation and surprisingly creep upward?
Traders of the Great British Pound, South African Rand, Euro, Canadian Dollar, and the Japanese Yen should circle these dates in their economic calendars.
While inflation data is usually closely watched, the surprising inflation figures released in the US last week means traders should be extra vigilant with their inflation watching.
Last week, the US inflation rate (September, YoY) surprised the market by beating expectations. Inflation in the US was expected to report at 5.3%, level with the rate reported in August. However, the actual figure arrived ten basis points higher (5.4%) and returned inflation to the 13-year high seen a month earlier in July 2021.
As it stands, Trading Economics is forecasting inflation in the US inflation rate (October, YoY) to rise another ten basis points to 5.5%. If inflation were to cross 5.6%, a new 30-year record would stand (US inflation Jan, YoY, 1991 was 5.7%).
Wednesday, 7:00 pm (NZDT)
What is the forecast for Sep: 3.2%
Wednesday, 9:00 pm (NZDT)
What is the forecast for Sep: 4.9%
Wednesday, 10:00 pm (NZDT)
What is the forecast for Sep: 3.0%
Thursday, 1:30 am (NZDT)
What is the forecast for Sep: 4.1%
Friday, 12:30 pm (NZDT)
What is the forecast for Sep: -0.4%
The Rand has chipped away at the USD for the better part of a year, resulting in a currency exchange rate of 14.14 ZAR per USD. The pair has begun uncomfortably consolidating in a range, with wicks indicating quite a bit of indecision. Two important South African reports are set to be released this coming Wednesday. These reports could influence the pairs exchange value and help set off an upwards or downwards trend.
I am waiting for a breakout.
I am bullish on the side of the USD in this regard.
Please note. The South African Rand is only tradable on our MT5 platform. It is not available on our MT4 platform.