May 03, 2022 06:47 GMT
- USD/ZAR trades -0.23% lower this morning, retracing some of yesterday’s weakness in thin holiday markets.
- ZAR has been on a notable roller-coaster of late as a result of broad-based risk off, reduced terms of trade and falling Chinese growth expectations – resulting in a sharp unwind in previously favourable long ZAR positioning.
- SA’s improved fiscal picture and still-strong external balances still remain attractive, and alongside a robust March trade balance and solid real yields reflect which reflect decent macro fundamentals.
- At these levels, USD/ZAR looks fairly stretched to the upside, but will need a more sustainable turnaround in global risk sentiment before achieving greater stability around the 15.50-15.00 mark.
- The focus this week will undoubtedly be on the Fed and USD strength as Powell prepares to accelerate the Fed’s tightening. Intraday Sup1: 16.006, Sup2: 15.9593, Res1: 16.1499, Res2: 16.2141