Forex Analysis Report 6-26-20...The South African Rand Continues To Show Strength
Because forex market is the most liquid market in the world, trends 24 hrs a day, 5 days a week and offers a lot of leverage (which could be very good or very bad if you don’t manage your risks).
The first time I talked about the Rand was about one week ago. The Rand is the currency in South Africa and has been since 1961. Once upon a time…50 years ago, the South African currency had a value higher than the US dollar, but has decreased over time due to sanctions against the country as a result of South African policies on apartheid.
Tito Titus Mboweni is the current Minister of Finance of South Africa and the first Black South African to hold the position. On Wednesay, Tito Mboweni laid out the damage done by Covid-19 from a finance and budgetary standpoint.
The budget deficit is expected to reach 15.7% of GDP for the current financial year — 2020/2021, up from February’s estimate of 6.8% of GDP. The government’s debt levels will rise to 81.8% of GDP by the end of this fiscal year vs. 65.6% as projected in February. As a result, the government intends to borrow $7bn (R121bn) from international finance institutions.
The Rand outperformed Thursday on stabilising risk appetite and as the South African currency caught up with the local bond market following Finance Minister Tito Mboweni's emergency budget, but a second wave of U.S. coronavirus infections is threatening the rally and analysts say the upside is limited.
South Africa's Rand was rising in a show of strength that it had lacked in the prior session when Finance Minister Mboweni's supplementary budget was warmly received by the local bond market.
USD/ZAR and the Pound-to-Rand rate fell heavily but the South African currency was also higher against all other developed world currencies as well as its emerging market rivals.
A week ago, the set up on the USD/ZAR daily chart (Entry Time Frame) suggested for a counter-trend trade, to sort price at the daily supply at 17.5000 with a target at 15.5000.
Price action is now reacting to the daily supply as now.
According to a Bank of America analyst, the British pound is behaving like an emerging markets currency (like the Norwegian Krone) due to Brexit and liquidity conditions. Also, London is the world’s capital for Forex and is one of the world’s biggest financial centers, but in times of uncertainty like the world is in now, their banking sector gets exposed to a lack of credit as a risk off reaction.
Thus, the GBP/ZAR resembles the USD/ZAR chart. As a result, the charts suggest more downside risk as well.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
