Goose96

Rand looking positive heading into year-end.

Short
FX:USDZAR   U.S. Dollar / South African Rand
The USD/ZAR pair seems to be in an ABC corrective wave pattern after completing a 5-wave impulse that commenced in April this year. Following last week's presidency scare, the rand has been able to pull the pair back below the 23.6% Fibo retracement rate of 17.50. Positively for the rand, it managed to keep the pair below the 50-day MA resistance rate of 17.74 and the neckline of the upward blue channel. The major support rates that need to give way for further rand strength as we head into year-end sits on the 38.2% Fibo rate of 16.87 and the major support of 16.80, the 61.8% Fibo retracement from the rand post covid bull run. As long as 16.80 holds the possibility of seeing 19.34 still remains. I'm however expecting a re-test of the support range between 16.80 and 16.86 and a break below this range will allow the rand to pull the pair onto the 200-day MA of 16.50.

In terms of technical indicators, the RSI is showing bearish divergence, which is rand positive. Conversely, there is currently a buy signal on the MACD following last week's presidency scare.

Apart from increased loadshedding and electricity uncertainty the fundamentals for the rand are looking relatively positive. SA GDP increased 1.6% q-o-q in 3Q2022, putting the economy back above pre-pandemic levels. Agriculture grew 19.2% in this period which will boost exports going into year-end which is rand positve.
SA 10-year government bonds currently yield 9.105%, so the carry trade is still strong as US 10-year treasuries currently sit at 3.540%, down from the highs of 4.25% in October.
In terms of commodities (the rand behaves as a commodity currency) I mainly look at platinum . Platinum is currently trading around $990 per ounce, up 19.57% from the lows we saw in August.

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