The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).
South Africa got ‘junk’ status from Moody’s
What’s going on?
Moody’s downgraded the country to ‘junk’ status on Friday. It sent the country’s CDS up 31 basis points to 439 on Monday, data from IHS Markit showed. The country was stripped of its last remaining investment grade rating. In fact, South Africa’s economy collapsed before the coronavirus outbreak.
South Africa’s 5-year credit default swaps - used by investors to insure against a government debt default - jumped to their highest level since 2009. As a result, it will fall out of the FTSE World Government Bond Index after April, which could prompt significant capital outflows. Moreover, it will also surge borrowing costs, and that will make it even more difficult for the government to close the budget gap.
What does it mean?
Let’s look at the chart below that represents USD/ZAR exchange rate monthly. The rand fell to a record low of 17.9630. The direction of USD/ZAR is skewed to the upside. It may reach 18.0000 mark and break above previous 2016 high of 17.7840. On the downside, USD/ZAR remains supported above 15.3750, which marks the 61.8% Fibonacci retracement.
The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
Last week was full of surprises! Stock indices have shown significant growth…
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).