FX:USDZAR   U.S. Dollar / South African Rand
[Fundamental insight:

We are experiencing an influx of ‘endemic’, and Covid is on the verge of disappearing from the news. With record U.S. inflation , the market is not in hurry to buy USD toward March rate hike. We are still in the strong bullish bias on USD into March. With the tight labor market, no matter what, inflation will keep rising and will be rising even more as pandemics fades away. And the March hike rate has been confirmed by Jerome Powell.

The key moment for the next week is FOMC. We suspect that the Fed will only re-iterate their previous stance with some wishy washy flavor like easing inflation , supply bottleneck, etc. This will not affecting their stance to hike on March.

The setup:
  • However, it is always possible that there will be further weakness for USD. This is why it is always important to start enter position lighty relative to your account. So it have capability to averaging in case that the trade not going into our favor immediately. If you are not comfortable or not experience on this kind of trade, it is better to stay away.
  • This is more about broader view on USD, please do your own diligent to check entry based on your method or technical analysis .
  • Do not forget that this is an exotic pair. Which mean, the pip value is there. and the big spread spike on some brokers is always possible.
  • Remember to always trade safely.

Trade active
Comment: Very nice.. strike up nicely on Monday
Comment: South African Grid Collapse Concern Prompts Utility to Resume Power Cuts.
South Africa had a record 1,150 hours of outages last year
Utility has been dogged by financial, operational problems

-- Another Risk for ZAR
Comment: Oil approaching $100, US10Y yield about to reach 2.0%, oil get into $100 soon, and huge beat on job creation (NFP) 467,000 compared to the median forecast of 125,000 kick the previous ADP release out of the picture. With all the growth stats above the pre-pandemic level all across the major economy, rising wage, workers scarcity. Inflation inevitably will burn more hotter, and next week we potentially will have another volatile week, as it’s scheduled for US CPI release. This is happening in the context of mounting concerns about another Fed policy mistake and a stunning lack of urgency in policy guidance.

No matter how Central Banks communicating their forward guidance, we are not fall back off the tightening cycle, All the number in stats suggest that the ‘transitory’ theme was a fatal reading mistake, and Central Bank won’t be trapped into more far from the curve situation to control the inflation. All this bring us to conclusion to still strong bullish on USD into March
Comment: Next week is a big week!


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