RAND TALKING POINTS & ANALYSIS
- Recovering South African current account encouraging for ZAR.
- NFP to determine short-term guidance.
- USD/ZAR bears eye rising wedge breakout.
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USD/ZAR FUNDAMENTAL BACKDROP
The South African rand gained traction against the USD this Thursday as a weaker dollar and broad-based commodity gains supported the Emerging Market (EM) currency. South African current account for Q3 (see economic calendar below) improved significantly but remains below positive territory. Overall, a net positive for the rand but the primary driver for this week has been US specific factors. Prior to the US open, jobless claims data missed expectations but stayed within recent ranges. No real surprises leave tomorrow’s Non-Farm Payroll (NFP) report under the spotlight. Barring the headline figure and unemployment, softening average earnings will be closely monitored to see whether or not this trend continues.
Later today, US consumer credit change close out the trading session and could provide some short-term volatility.
USD/ZAR ECONOMIC CALENDAR (GMT +02:00)
Source: DailyFX Economic Calendar
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TECHNICAL ANALYSIS
USD/ZAR DAILY CHART
Chart prepared by Warren Venketas, TradingView
The daily USD/ZAR chart now looks to approach the apex of the rising wedge formation (dashed black line) coinciding with wedge support. A confirmation candle close below could spark further downside but I would like to see a close below the 200-day moving average (blue) as well. The key inflection zone around the 18.7759 level has proved to be a potential turning point in the past which supports the indecision by traders to favor any particular directional bias as shown by the Relative Strength Index (RSI). In summary, an NFP beat could negate the rising wedge while a significant miss could bring the 18.5000 psychological support handle into consideration once again.
Resistance levels:
- 19.0000
- 18.7759/50-day MA (yellow)
Support levels:
- Wedge support/200-day MA (blue)
- 18.5000
Contact and followWarrenon Twitter:@WVenketas
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Boost Your Profits: Take Advantage of the Weaker USD with Rand
If you’re a business owner or an investor, the current fluctuations in the global currency markets may be causing concerns for you. The U.S. dollar (USD) has been experiencing a downward spiral, which means it’s currently weaker compared to other major currencies. This weakening of the USD might seem like a disadvantage for some, but it can actually present a lucrative opportunity for those who know how to take advantage of it.
One currency that is seeing significant gains against the USD is the South African rand (ZAR). The rand has been performing strongly in the past year, and experts predict that it will continue to do so in the coming years. This presents a unique opportunity for businesses and investors to boost their profits by taking advantage of the weaker USD with the rand. In this article, we’ll discuss how you can leverage this trend and turn it into a win-win situation for your business and investments.
Benefits of Taking Advantage of the Weaker USD with Rand:
1. Higher Returns on Investments:
Investing in South Africa using the rand has become an attractive option for investors looking for high returns. With the weaker USD, the rand is currently undervalued, making it a perfect opportunity to invest in South African stocks or other assets. As the USD stabilizes and strengthens, these investments can yield significant returns, providing a great opportunity for profits.
2. Lower Cost of Production and Imports:
For businesses that rely on importing goods or materials, the weakening of the USD means a lower cost of production and a chance to increase profit margins. With the rand being stronger, businesses can take advantage of the exchange rate and pay less for imports from South Africa, which is one of the world’s largest producers of raw materials like gold and diamonds. Additionally, businesses that outsource services to South Africa can also expect lower costs, leading to higher profits.
3. Competitive Advantage:
With the USD being weaker, products and services produced in South Africa become more affordable for international buyers. This gives South African businesses a competitive edge in the global market, enabling them to expand their reach and increase sales. As South African exports become more attractive due to the favorable exchange rate, businesses in the country can expect to see a boost in demand, leading to increased profits.
Practical Tips for Taking Advantage of the Weaker USD with Rand:
1. Consider Investing in South African Companies:
Investing in South African companies listed on the Johannesburg Stock Exchange (JSE) can provide a great opportunity for increased returns when the USD strengthens. The JSE is the largest stock exchange in Africa and offers a range of industries and sectors to invest in, allowing for diversification of your portfolio. As the rand strengthens, the value of your investments in the JSE can significantly increase, leading to higher returns.
2. Develop Business Relationships in South Africa:
For businesses looking to take advantage of the weaker USD, building strong relationships with suppliers or manufacturers in South Africa can prove beneficial in the long run. A strong business partnership with companies in South Africa can lead to lower costs for imports and services, providing an edge over competitors and increasing profit margins.
3. Monitor Currency Exchange Rates:
Staying up to date on the latest currency exchange rates is essential for making well-informed decisions when it comes to leveraging the weaker USD with the rand. You can use online tools or consult with a financial advisor to keep track of the exchange rates and strategize accordingly, to maximize your profits.
Case Study: How One Company Used the Weaker USD to Boost Their Profits.
One such company that has successfully leveraged the weaker USD with the rand is Tesla Inc., an American electric vehicle and clean energy company. Tesla has been looking to expand its presence in the global market, and their strategy involves setting up a manufacturing plant in South Africa. With the current weakening of the USD, Tesla can import materials cheaper and enhance production in their South African plant, significantly increasing their profits.
Final Thoughts:
The current trend of the weaker USD presents a unique opportunity for businesses and investors to boost their profits by taking advantage of the rand. By investing in South African companies, building strong business relationships, and monitoring currency exchange rates, you can leverage this trend and turn it into a win-win situation for your business. As the USD strengthens in the future, you can expect to see increased returns and profits, making this a viable strategy for long-term success. So don’t wait any longer, start exploring the possibilities and take advantage of the weaker USD with the rand today!
