While South Africa slowly recovrs from another long weekend with three public holidays, the rest of the (financial) world kept spinning. At the start of the new week the main story revolved around the US Dollar (Greenback) coming under more pressure. The Dollar – Yen Exchange Rate has slipped to a fresh 18m low, despite thin trading conditions due to Japan also being on public holidays from Tuesday to Thursday last week. Also, the latest US Commodities Futeures Trading Commission (CFTC) data shows that net USD shorts have reached their highest levels in more than three years. This all comes on the back of the US Federal Open Market Committee (FOMC) making sure the market understood that it was in no hurry to hike rates.
Against this backdrop, the fact that the USD-ZAR did not dip more than it did towards the end of last week is interesting. Not only should the weaker USD have helped, but confirmation that SA’s judiciary remains intact as corruption charges against President Zuma are likely to be reinstated should have arguably assisted the ZAR more than it did. Could it be that after an impressive performance through the course of the past month that the ZAR gains feel somewhat extended?
A technical assessment of both the weekly and the monthly data suggests that this may very well be the case. Of course it is always difficult to know for sure when trading volumes have been affected by the long weekend and the public holidays in South Africa and Japan, but these are certainly features to consider.
The outlook is currently good and for those who travel in the US Dollar territories, enjoy the break 😉