CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

USD/ZAR pushing 5-month lows ahead of SARB

March 22, 2022 6:33 PM

The South African Reserve Bank (SARB) meets on Thursday this week to decide how much it should raise interest rates.  Expectations are for a 25bps hike to 4.25%, however it is possible the central bank may hike 50bps in the wake of the sudden explosion is commodities, specifically oil, since the beginning of the Russia/Ukraine war.  The last time the SARB met was in January, before the invasion began and it hiked 25bps. It has now hiked rates by 25bps at each of its last 2 meetings. Ahead of the meeting on Wednesday, South Africa will release February’s CPI report.  Expectations are for 5.8% YoY vs 5.7% YoY in January.  If the inflation reading comes in hotter than expected, will the SARB hike by more the 25bps? 

What are emerging markets?

USD/ZAR has been moving lower since making a high in March 2020 near 19.3390.  The pair pulled back and made a low on January 8th, 2021 at 13.4058.  USD/ZAR then bounced to the 50% retracement level from that timeframe near 16.3724 on November 26th, 2021.  This was also the 161.8% Fibonacci extension from the high of August 20th, 2021 to the low of September 10th, 2021.  The pair has been moving lower since.

Source: Tradingview, Stone X

 

Trade USD/ZAR now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

On a 240-minute timeframe, USD/ZAR has been moving lower in an orderly channel since the November 26th, 2021 highs.  On Tuesday, the pair broke below the 50% retracement level from the low of June 4th, 2021 to the November 26th, 2021 highs, near 14.4127.  Support below is at the bottom trendline of the channel near 14.6500, then the 61.8% Fibonacci retracement level from the recently mentioned timeframe near 14.5127. Horizontal resistance is above at 15.0244 then again at 15.1810.  Above there, resistance is at the top, downward sloping trendline of the channel near 15.3800.

Source: Tradingview, Stone X

The South African Reserve Bank meets on Thursday and is expected to hike rates by 25bps.  However, on Wednesday, South Africa will release CPI.  Whether the central bank raises rates by 25bps or 50bps may depend on the outcome of the CPI report!

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024