Happy Friday, traders! Are you ready to trade at the end of the week? Here’s what you need to know before you start:
ZAR: an intriguing speech
Performance in 2020: +9.5%
Last day range: 15.1743-15.2590
52-week range: 13.8100-15.4974
An intriguing speech
Today, the South African Finance Minister Tito Mboweni is delivering the budget speech (14:00 MT). And that’s a big intrigue for the country and for the ZAR consequently. Currently, South African economy is not in the best shape: state debt is big and keeps increasing, domestic economic growth is sluggish, state-owned enterprises are mostly troubled, the unemployment rate is high. The international prestige of the country suffers a lot because of this venomous bouquet: Moody’s rating gives the lowest mark to South African investment climate. This, in turn, pushes away international capital inflows, which otherwise would be able to give a spark to the country’s economy and revive it at least to some extent.
Gate to 5-year highs
Under these circumstances, the ZAR has been dropping against the US dollar almost in a straight decline since the beginning of 2020. Compared to where it was on 31 December, it lost almost 10% of its value against the USD. Now, the USD/ZAR is testing the resistance of 15.3000. This level is not only the mid-term resistance established by October high – it is a gate to the lower border of the range where USD/ZAR has been peaking ever since 2015. Therefore, the speech of the South African Finance Minister today will be as timely as tactical, from the currency performance point of view. Even strategic. Especially, if it is indeed going to be full of good news, as the South African President Cyril Ramaphosa noted. Hence, all eyes will be on Mr. Mboweni today – make your bets.
The first week of November promises to be eventful, as we have the Fed meeting, the BOE update, and the NFP release. Read more details here.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.