- USD/ZAR drops to fresh multi-week lows near 14.60.
- Manufacturing Production contracted 0.1% MoM in December.
- President C.Ramaphosa will speak at the SOTN later on Thursday.
The South African rand gains further traction and drags USD/ZAR to fresh multi-week lows in the vicinity of 14.60 on Thursday.
USD/ZAR now looks to politics
USD/ZAR quickly leaves behind Wednesday’s uptick and resumes the downtrend with the initial target at the 14.60 region. The pair, in the meantime, trades on the defensive for the fifth consecutive week so far, as the better tone in the risk complex in combination with higher commodity prices and dollar weakness all plays in favour of a stronger rand.
Also supporting the upside momentum in ZAR, data released earlier today showed the Manufacturing Production contracted 0.1% MoM in December, bettering estimates and tempering November’s 1.3% drop. In addition, Mining Production reversed the previous sharp contraction (9.4%) and expanded at a monthly 0.1% in the last month of 2020. Gold Production contracted 0.9% from a year earlier, also bettering the 6.4% drop from the previous reading.
In the meantime, investors are expected to closely follow the State Of The Nation speech by President Cyril Ramaphosa later on Thursday, with the centre of attention on the vaccine rollout, programmes oriented to help the economy and the always-thorny issue surrounding electricity shortages, namely Eskom.
USD/ZAR levels to consider
As of writing spot is retreating 0.76% at 14.6304 and faces the next support at 14.5050 (2021 low Jan.4) seconded by 14.2729 (low Jan.23 2020) and then 13.9311 (2020 low Jan.2). On the flip side, a break above 14.9886 (55-day SMA) would open the door to 15.3775 (high Jan.28) and finally 15.6609 (2021 high Jan.6).