The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
South Africa’s GDP and vaccine hopes drove ZAR up
2020-12-08 • Updated
USD/ZAR dropped to the low levels unseen since February as investors foresee the soon global recovery.
Some countries such as the UK started massive vaccinations, while others are already in the final steps. Therefore, investors streamed their capital to riskier assets like emerging market currencies on prospects for a global economic recovery. Indeed, the virus will be taken under control soon and the world economy will be boosted. According to Credit Suisse, “EM [emerging market] also looks well positioned to outperform whether there is a value- or growth-driven rally in 2021”.
Why specifically emerging markets?
It was necessary to impose record low interest rates in the world’s largest economies to stimulate economic activity. These countries won’t increase rates anytime soon. Whereas emerging markets have significantly higher rates and therefore higher yields. That’s why it’s beneficial to invest money in emerging markets.
USD/ZAR fell due to the optimistic vaccine news and the weak US dollar. Elsewhere, South Africa’s GDP recovered by 66.1% in the third quarter, showing the steady economic rebound of the country. However, it is still far away from the pre-pandemic levels.
Traders should closely observe this pair now as it has approached the key support of 15.0000. The price isn’t likely to break this level for the first attempt and we might see the retracement. If it manages to cross this level, the way down to February lows of 14.7250 will be clear. On the flip side, the move above the 50-period moving average of 15.2500 will drive the pair to the high of November 30 at 15.4500.
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Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.
The views here are solely based on Technical Analysis techniques using my personal Smart Money approach. Hence, it is important to understand that the trading of CFDs comes at a risk; if not properly managed, you may lose all of your trading capital. To avoid costly mistakes while you look to trade these opportunities, be sure to do your own due diligence and manage your risk appropriately.
Even though we've only witnessed sluggish movements from the Dollar over the past few weeks, the general idea and bias still seem intact and untampered. The bullish impulse however can be seen as "searching for support".