SARB decision weekThe SARB will announce their latest repo rate on Thursday and expectations are for the SARB to leave rates unchanged at 8.25%. The SARB will lag the Fed when it comes to rate cuts so South Africans should, on a best case scenario, only expect rate cuts in the back-end of the year. The SARB will not cut rates until the Fed has started cutting rates.
The rand strength has faded significantly since the pair failed to break below the February low of 18.53. The pair is now in a peculiar range between 18.98 and 18.68. I’m leaning towards a break above 18.98 which will allow the pair to re-test the red resistance range around the 19.20 handle. A failed break above 18.98 will however see the pair fall back onto the support at 18.68. Technically the cross of the 50-day MA above the 200-day MA is rand negative. For now, the pair is still stuck in the blue wedge we have been highlighting throughout the year. A top side break out of the wedge will see the rand tumble above the 19.50 handle and a break above 18.98 will an early indication for this move.
