Oscillations around 200-day MA support (short-term)
The rand managed to pull the pair below the 200-day MA, currently at 16.82, last week Thursday following the US CPI print. The pair is however finding support around its 200-day MA and the dollar strength in today's early morning session has seen the pair blast up to the blue 23.6% Fibo retracement rate of 17.12. The macro risk-on factors mentioned below are rand positive, but the technical indicators are not. The divergence on the RSI and the buy signal on the MACD have me leaning towards another test of the 50-day MA rate of 17.19 and a break higher towards the 38.2% Fibo retracement rate of 17.39 and the current yearly high of 17.44.
The US CPI print for December added fresh wind into the risk-on sails as the CPI result was in line with expectations at 6.5% and 0.6% lower than November’s print. Last week’s lower than expected initial jobless claims coupled with the strong December non-farm payrolls data is also supportive of the narrative of a strong US labour market. On paper US inflation seems to be easing and its labour market is looking resilient which has the market optimistic for a ‘soft landing’ following the current rate hiking cycle. The current risk-on sentiment in the markets can also be seen in the early year gains for the S&P500 and Nasdaq 100 which has gained roughly 5.50% and 7.02%, respectfully, since the start of the year.
The US CPI print for December added fresh wind into the risk-on sails as the CPI result was in line with expectations at 6.5% and 0.6% lower than November’s print. Last week’s lower than expected initial jobless claims coupled with the strong December non-farm payrolls data is also supportive of the narrative of a strong US labour market. On paper US inflation seems to be easing and its labour market is looking resilient which has the market optimistic for a ‘soft landing’ following the current rate hiking cycle. The current risk-on sentiment in the markets can also be seen in the early year gains for the S&P500 and Nasdaq 100 which has gained roughly 5.50% and 7.02%, respectfully, since the start of the year.
