The South African rand has a strong seasonal pattern [Video]

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.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

EUR/USD turns negative near 1.1850

EUR/USD has given up its earlier intraday gains on Thursday and is now struggling to hold above the 1.1850 area. The US Dollar is finding renewed support from a pick-up in risk aversion, while fresh market chatter suggesting Russia could be considering a return to the US Dollar system is also lending the Greenback an extra boost.

GBP/USD change course, nears 1.3600

GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.