During the daily press briefing of Andres Manuel Lopez Obrador, it was announced that Mexico will receive 1.4 million doses of the vaccine by the end of January. Is that optimistic enough for the peso?
What weakens the South African rand?
The South African currency has weakened on Tuesday. As a result, the USD/ZAR pair has tested its March’s highs near the 14.63 level.
What are the reasons?
· One of the main reason has political roots. Cyril Ramaphosa, the recently chosen president of South Africa, vowed to boost employment and eliminate corruption. However, investors worry about his ability to do that. Their worries increased after the widely expected announcement of the new Cabinet was postponed on Monday.
· The head of Eskom, the South African electricity public utility, Phakamani Hadebe, resigned from his post. Now, the leading state enterprise is expected to report a 20 billion rands loss for the previous financial year.
· Finally, S&P Global Ratings kept South Africa’s credit rating below investment grade on Friday.
· Also, take a note that the escalation the US-China trade war hurts the ZAR as well.
Now investors pay attention to the news concerning the announcement of the new Cabinet of ministers. The decision should be made later this week.
What about the technical levels?
Bulls keep testing the resistance at the weekly pivot at 14.6287. The next resistance will lie at May 28 high at 14.7220. The pair needs to fall below the 14.5215 and 14.4282 levels to resume the bearish pressure. The first support for it lies at 14.3210. If this level is broken, the next key support will be placed at 14.2761 (50-day SMA).
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.