South Africa’s GDP has decreased -0.7% quarterly over the three months to June 2022 compared to market forecasts a -0.8% decline as devastating floods in KwaZulu-Natal and intense electricity rationing negatively affected a number of industries. Meanwhile, production grew 3.7% a year earlier in July 2022, below the market forecast for a 4% growth after three consecutive months of decline. On a seasonally adjusted monthly basis, the production of the manufacturing industry decreased slightly -0.2% in July after a redesign 2% in June compared to the market forecast and -0.7% decrease.
The South African rand continues to show weakness, amid a still strong US dollar, due to expectations of an aggressive monetary policy from the Fed and weakening commodity prices, especially gold. During 2022, the South African Rand weakened –7% against the US dollar. And since the rebound in June 2021, it has corrected above the 61.8% FR level. In the previous week, analysts from Credit Suisse raised their USDZAR target spread to 17:00-18:00.
USDZAR – This exotic pair continues to show bullish dominance as evidenced by the price action. It is still above the 26-week and 52-week EMAs, despite the bounce to 13.3823 while he was seen standing on 17.5410. On the other hand, resistance remains at 17.7817 below the April 2020 peak.
On the daily time frame, Friday’s decline continued on Monday by briefly breaking the lower trend line of the rising wedge pattern. Price movement is currently blocked by minor support at 17.0151. A move below this price level could test the pair for further support 16.7071 (52 EMA). The prospect of a medium-term bullish trend is not yet over if the price is still moving above important support 16.1055. While up, move up 17.3291 will retest the recent high 17.5410 and the continued weakness of the Rand still leaves resistance in place 17.7817.
In the H4 period, there was less support from 17.0151 will be a concern for intraday traders as a break of this level could lead to a short-term decline with the possibility of testing 16.7071 and on to key support 16.1055. Oscillator and EMA indications tend to reflect newly created bearish momentum in Friday and Monday trading. On the other hand, price levels 17.2136 and 17.3291 will defend the rally that is trying to rebuild.
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Market Analyst – HF Educational Office – Indonesia
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