Giles Coghlan LLB, Lth, MA
Financial Source
The fallout from the Federal Reserve meeting will be key to whether this seasonal pattern plays out. If the market sees sooner tapering and interest rate hikes than before the Fed meeting then emerging market currencies like the South African Rand are liable to see weakness. However, if the market embraces USD weakness once again and the FED is dovish in their actions then this seasonal pattern could be perfect for emerging market currency traders. A dovish action by the Fed would be the dot plot unchanged, no talk of bond tapering, and downside risks stressed.
Over the last 15 years, ZARUSD has gained in value twelve times between June 17 and July 30. The largest gain was in 2016 with an 8.62% profit. The largest loss was -3.44% in 2015 and the average return over the last 15 years has been 2.30%.
Major Trade Risks: A hawkish tone from the Federal Reserve would invalidate this outlook as it will cause USD bears to step aside and allow the USD to rally. So, the markets considered reaction to the latest Fed meeting will be key.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.