USDZAR,H4
South Africa’s Central Bank (SARB) raised its benchmark interest rate for the second time on Thursday and warned that further gradual increases in borrowing costs are likely. The SARB raised the interest rate 25 bps from 3.75% to 4%, in line with the consensus, and warned that further hikes in the benchmark may be needed to keep inflation in check, over the coming years. “However, economic and financial conditions are expected to remain more volatile in the future,” SARB Governor Lesetja Kganyago said in a statement.
In December, headline inflation increased further to 5.9%, above market expectations of 5.7% and moving closer to the top of the 3-6% SARB target range. The headline CPI forecast has been revised slightly higher to 4.9% in 2022 (vs. 4.3% in November) but lowered to 4.5% in 2023 (vs. 4.6%). Meanwhile, GDP growth projections remain unchanged at 1.7% for 2022 and 1.8% for 2023.
The South African Rand stood out for its resilience in the face of a resurgent US Dollar during most of the early session, however in the US session the Rand lost ground against the Greenback.
USDZAR,H4
The currency’s intraday bias looks neutral below the resistance at 15.5680. A move above this level will target the resistance levels 15.7355 and 16.0739. As long as the resistance at 15.5680 holds the movement will likely consolidate in the early session. RSI and MACD are still validating yesterday’s volatility, RSI is above the 50 level, MACD and OSMA are also above the midline. This slightly confirms the movement which tends to move to the upside. As long as the support at 15.0499 holds on the downside, the pair will still move in the direction of the ascending channel. A move below the support at 15.0499 will annul the bullish scenario.
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Ady Phangestu
Market Analyst
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