Get started

Southafrica

South Africa (EZA) a good Precious Metals playPrecious metals (PM) have really struggled this week, with the following weekly movement in USD: Gold TVC:GOLD -5.65% Silver TVC:SILVER -7.17% Platinum TVC:PLATINUM -7.2% Palladium TVC:PALLADIUM -8.23% All these PM’s seems to be heavily oversold over the shorter-term, which could see a bit of a recovery over the next week or two. Why is this important? Currently 24% of EZA consists of PM’s, which was the main reason for the recent pullback in the ETF. EZA finds itself at a strong support level and very close to EXTREME OVERSOLD levels according to its 14-day RSI. Should $48.50 not hold up, my stop loss would be at the 200-day Moving Average (EMA). This currently is $46.86. Should we see a bounce off the current levels, could see EZA test the 50-day EMA at 51.29 resistance, with a break and close above these levels, most probably bringing back new 12-month highs. I am somewhat worried about the negative recent momentum and will monitor closely
AMEX:EZALong
by SchalkLouw
2
South African Rand Follows ThroughThe Financial Post had the following to say to try to explain the fresh strength in the South African rand (USD/ZAR): "With the local economy remaining weak and facing power cuts, the rand’s recent rally has been mainly on the back of global factors, including higher commodity prices which benefit resource-rich South Africa and expectations U.S. lending rates will stay lower for longer." This explanation falls well short of the longer-range dynamics benefiting the rand on this foollow-through move for a longer USD/ZAR downtrend. Commodity prices are soaring, and South Africa is a direct beneficiary. More importantly, the South African central bank expressed great confidence in the economy in mid-April. I posted the following at the time including key economic charts: South African Rand Boosted By Central Bank Confidence Last November, the South African rand (USD/ZAR) finished reversing its pandemic related losses against the U.S. dollar. Along the way I pointed out the benefits of getting long the South African rand. This week, USD/ZAR dropped to levels last seen in January, 2020. The rand looks to strengthen further based on the confidence expressed by South Africa’s Reserve Bank Governor Lesetja Kganyago in a recent Reuters interview. In the interview, Kganyago expressed confidence that investors will remain interested in buying high-yielding South African bonds even as monetary policies start to normalize (higher rates) around the globe. Moreover, South Africa enjoys a real rate advantage over other emerging market countries given South Africa’s success in containing inflation. Higher bond yields attract capital inflows and boost the domestic currency. The following quote convinced me of Kganyago’s determination to contain inflation: “High inflation perpetuates inequality..Those who are rich can buy assets to protect themselves from inflation, they can buy shares and bonds and property. But those who are earning fixed incomes, whether a salary or a government social grant … if inflation erodes it you have to wait for the next increase.” The South African Monetary Policy Forum The Reuters interview likely came after the Reserve Bank released its April report monetary policy (the “Monetary Policy Forum”): the commentary in the interview supported themes from the report. The report reflected Kyganyago’s confidence. For example, here are some of the Reserve Bank’s main points: Global recovery stronger on vaccination & stimulus Domestic recovery on track, some sectors constrained SA inflation well-contained… balanced risks Gradual normalization with low inflation {The South African Reserve Bank is confident in a future of well-contained inflation.} I was most impressed with the strength in South Africa’s terms of trade. The country’s terms of trade broke out in late 2019 and has trended sharply higher since then. The trend managed to to stay strong through the pandemic with a slowing in Q4 of 2020. This overall strength bodes well for the post-pandemic recovery in South Africa. {The prospects for the South African economy look good with an uptrending terms of trade.} The Trade in the South African rand The strong terms of trade particularly support a strong currency with surging commodity prices leading the way. Combining with a high yield, the South African rand is an attractive currency trade. I missed the last round of downward pressure on USD/ZAR, but I am on alert to fade the next bounce. Ideally, I can start a new position short USD/ZAR on another test of declining resistance at the 20-day moving average (DMA) and/or the 50DMA. Be careful out there!
Short
by drduru
J200 Analysis With all the tension happening in the US stock markets it could have a severe impact on South African markets as well. This is an analysis of the JSE TOP 40. If inflation goes up enough in American markets the federal reserve could take actions to raise interest rates, meaning higher rates reduce stock valuations because why? They weaken the present value of future cash flow of companies traded. And as we all know the US market effects all markets. Disclaimer: This is not investment advice just a light warning and please invest with caution! Best of luck.
JSE:J200
by Driesman743
The Rand looks mostly overboughtThe strength in the rand is partly due to the high demand in commodities of which South Africa is a large exporter. It is also partly due to the fact that South African government bonds are offering high real yields compared to that of its peers. These factors feed the demand for the rand and thus resulting i a stronger currency. There is also the case of a potential weakening US dollar As long as the real yields on South African bonds stay relatively high and liquid, coupled by the demand in the commodity cycle, the rand is likely to remain strong against the US dollar. The signals suggest that the rand has for the most part, found a short term bottom at around R13.95. The Stochastic RSI suggests that the rand may fall back to around R13.85 before it climbs back to around R14.10. Emerging market currencies are impossible to call but I'd bet that the rand should range between R13.95 and R14.20 over the next 2 weeks or so. The irony is that the forces strengthening the rand are ignoring the South African centric risk factors. Please like and follow for daily posts on various asset classes. Please also share your views on the trading ideas and whether or not you find them to be of any value to you as a trader. Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.
Long
by JesseMorgans
1