The US dollar had a very strong session against the South African Rand on Friday after the jobs report came out much hotter than anticipated. In this is more or less a “risk off” move, or perhaps just a sign that people are starting to pay attention to the economies again. This isn’t so much about interest rate differential as it is about the possibility of global growth.
We did break above the 200 day EMA, but then pulled back a little bit. What is most telling to me though is the fact that we had broken above several inverted hammers from earlier in the week. That shows a complete blowout of the selling pressure over the last couple of days. At this point, it looks as if the 14 Rand level continues to be support, and if we can break above the top of the candle stick during the trading session on Friday it should continue to drive this market towards the 14.50 Rand level.
The alternate scenario of course is that we break down below the Thursday candle stick and insert driving towards the 13.50 Rand level. At this point, the bullish candle of course is a very good sign, at least for the greenback. That being said, Jerome Powell has already stated that the Federal Reserve was going to be as accommodative as needed to keep the economy going forward. That does suggest that perhaps the Federal Reserve is still going to cut interest rates but quite frankly emerging market currencies operate a little bit different than some of the other major ones. In other words, we could see the US dollar rally against the Rand, while falling against several other major currencies such as the Euro. The simplest solution is that simply take which ever break direction we get from the daily candle stick on Friday.
We did break above the 200 day EMA, but then pulled back a little bit. What is most telling to me though is the fact that we had broken above several inverted hammers from earlier in the week. That shows a complete blowout of the selling pressure over the last couple of days. At this point, it looks as if the 14 Rand level continues to be support, and if we can break above the top of the candle stick during the trading session on Friday it should continue to drive this market towards the 14.50 Rand level.
The alternate scenario of course is that we break down below the Thursday candle stick and insert driving towards the 13.50 Rand level. At this point, the bullish candle of course is a very good sign, at least for the greenback. That being said, Jerome Powell has already stated that the Federal Reserve was going to be as accommodative as needed to keep the economy going forward. That does suggest that perhaps the Federal Reserve is still going to cut interest rates but quite frankly emerging market currencies operate a little bit different than some of the other major ones. In other words, we could see the US dollar rally against the Rand, while falling against several other major currencies such as the Euro. The simplest solution is that simply take which ever break direction we get from the daily candle stick on Friday.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.