USD/ZAR could edge higher – Danske Bank

Pablo Piovano FXStreet

Pernille Henneberg, Senior Analyst at Danske Bank, noted the recent events around the South African Rand.

Key Quotes

“In emerging markets, the South African rand has taken a heavy beating overnight, weakening 5% against the USD, after President Jacob Zuma fired Finance Minister Pravin Gordhan and eight other cabinet members in an attempt to arrest flagging support for his government and presidency”.

“The new Finance Minister is the Home Affairs Minister Malusi Gigaba, who, according to Bloomberg, does not have financial or business experience. The firing of Gordhan, who is well respected by the investor community and rating agencies for his prudent fiscal policymaking, is certainly negative for the outlook of the rand”.

“The move brings into question fiscal sustainability and, therefore, significantly increases the risk that South Africa will be downgraded to junk. With the events overnight, the USD/ZAR may move close to our current end-March target of 14.4 and may even move higher depending on the policy signals from the new cabinet and notably the Finance Minister”.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold recovers swiftly from weekly low, climbs back closer to $5,000 ahead of US CPI

Gold regains positive traction during the Asian session on Friday and recovers a part of the previous day's heavy losses to the $4,878-4,877 region, or the weekly low. The commodity has now moved back closer to the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures for more cues about the Federal Reserve's policy path.