The Rand looks mostly overbought
The 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.
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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.
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