#BRICS currencies movement for the week – 18 October 2019
Although the South African Rand started off the week under pressure with the IMF firstly downgraded SA’s GDP growth forecast to 1.1% for 2020 (from previous 1.5%). This was followed by Eskom again announcing load shedding in South Africa. What is ironic is the fact that the IMF in the above-mentioned report contributed the better second quarter growth to a more stable power supply. I quote: "growth recovered modestly in the second quarter in South Africa, helped by improved electricity supply". A plan by government to address Eskom’s headache however helped the Rand recover all its losses earlier in the week and ended flat.
This is in line with all other BRICS currencies, in an environment where we’ve seen some proper USD weakness this week.
#BRICS currency/USD movements for this week:
Brazil 0.0%
Russia +0.7%
India -0.2%
China +0.1%
South Africa +0.1%
Euro/USD +1.2%
Technically, the USDZAR touched the R15/USD level earlier this week, which had me worried. We however did not see the Rand close above R15, which I feel must be seen as some psychological “WIN”.
The USDZAR moving closer to oversold (overbought according to ZARUSD ) according to the 14-day RSI , but not extremely oversold yet. If USD remain under pressure, we could see the Rand’s momentum continue this coming week.
I must admit that I really like the turn in the trend of the 50-day moving average, which could be a bullish indicator. Small little break on a Symmetrical Triangle which I will monitor on Monday, with next support level now being R14.50. A break and close below this level, could see the ZAR seeking support at the 200-day Moving Average at R14.41. A Close below this level, targeting the primary support at R13.85 again.
Should we see weakness return, it will have me monitoring the R15 level again, with the 50-day Moving Average at R15.03 being next resistance. A break above these levels could target the R15.50 level again. This will be my stop-loss if I was a short-term trader.
I’ll stick to my call last weekl and remain long the ZAR (short USDZAR ).
This is in line with all other BRICS currencies, in an environment where we’ve seen some proper USD weakness this week.
#BRICS currency/USD movements for this week:
Brazil 0.0%
Russia +0.7%
India -0.2%
China +0.1%
South Africa +0.1%
Euro/USD +1.2%
Technically, the USDZAR touched the R15/USD level earlier this week, which had me worried. We however did not see the Rand close above R15, which I feel must be seen as some psychological “WIN”.
The USDZAR moving closer to oversold (overbought according to ZARUSD ) according to the 14-day RSI , but not extremely oversold yet. If USD remain under pressure, we could see the Rand’s momentum continue this coming week.
I must admit that I really like the turn in the trend of the 50-day moving average, which could be a bullish indicator. Small little break on a Symmetrical Triangle which I will monitor on Monday, with next support level now being R14.50. A break and close below this level, could see the ZAR seeking support at the 200-day Moving Average at R14.41. A Close below this level, targeting the primary support at R13.85 again.
Should we see weakness return, it will have me monitoring the R15 level again, with the 50-day Moving Average at R15.03 being next resistance. A break above these levels could target the R15.50 level again. This will be my stop-loss if I was a short-term trader.
I’ll stick to my call last weekl and remain long the ZAR (short USDZAR ).
Trade closed manually:
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