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Risk-On Fuels ZAR Rally Post-FOMC, Political Risks Eyed over Zuma
- USD/ZAR trades +0.12% higher this morning, tracking early price action in the BBDXY on the back of last night’s FOMC.
- The cross fell sharply following yesterday’s announcement as risk conditions improved, despite the notably hawkish elements of the meeting – although these were pretty well-telegraphed in the lead-up.
- As expected, the Fed doubled the pace of its taper with the dot plot alluding to 3 hikes in 2022 and upgrading its end-22 inflation forecast to 2.6% vs 2.2% prior.
- ZAR was among the primary beneficiaries of risk-on post-meeting, Falling back below the 16.00 handle to form a large bearish engulfing candle on the daily chart.
- The rejection of Zuma’s medical parole represents renewed political risks in SA and especially for Ramaphosa going into the holiday season.
- However, no major plans for unrest have surfaced yet. This will be monitored closely going forward.
- The cross should trade in line with global risk sentiment & USD-side developments today with locals away on holiday.
- Next key support is at 15.8726 & Resistance at 16.089.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.