Ke Dezemba update
Old target range is at jeopardy following the break below 15.00 this week. Revised target (15.50 and 15.64). A break above 15.36 could be a signal for a turn of trend and a possible bottom-out. The MACD is still holding a buy-signal and a move towards the 50-day EMA looks likely as dollar short sellers will look to close their short positions before year-end.
There is however a possibility of a looming bear flag and a weekly close below 15.00 will see the pair fall to the major support rate of 14.84 or lower towards the trend line from 2019.
Fundamentals: Disappointing local data dampened rand buying yesterday. Mining-, gold- and manufacturing production all came back weaker, compared to the production levels from September, in October. The South African current account swelled to R297.5 billion in the third quarter, up from the second quarter’s deficit of R123.7 billion. On paper this looks like a positive print but if we dig a little deeper the current account increase was due to the 201.4% increase in exports, largely driven by vehicle, precious metals and base metal exports. Again, this is positive, but imports declined by 1.6% which concerning as it highlights the feeble local investor and consumer demand. The commodity price recovery, particularly metals and crude oil, is however supportive of further rand appreciation before year-end.
There is however a possibility of a looming bear flag and a weekly close below 15.00 will see the pair fall to the major support rate of 14.84 or lower towards the trend line from 2019.
Fundamentals: Disappointing local data dampened rand buying yesterday. Mining-, gold- and manufacturing production all came back weaker, compared to the production levels from September, in October. The South African current account swelled to R297.5 billion in the third quarter, up from the second quarter’s deficit of R123.7 billion. On paper this looks like a positive print but if we dig a little deeper the current account increase was due to the 201.4% increase in exports, largely driven by vehicle, precious metals and base metal exports. Again, this is positive, but imports declined by 1.6% which concerning as it highlights the feeble local investor and consumer demand. The commodity price recovery, particularly metals and crude oil, is however supportive of further rand appreciation before year-end.
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