A relatively quiet economic data calendar gave the market time to digest the Federals reserve’s interest rate decision last week. The highlights from last week was the weaker than expected China trade data which reported a year-on-year drop in Chinese exports by 6.4%, while imports grew by 3%. Looking ahead the headlining event is the US CPI figure for October which is expected to come in at 3.3%. It is difficult to gauge how market sentiment will swing off the latest inflation report given the Fed’s most recent communication for higher for longer interest rates
Local data from the week was another sore eye after SA mining production fell 1.9% in September while manufacturing contracted 4.3%.The SARB however shake up local volatility. The SARB will most likely follow in lock step with the Fed this week which will see interest rates remain at 8.25%
Starting the charts today is our vulnerable local unit. The rand slipped last week after the USD/ZAR popped back like a beach ball above the 200-day MA rate of 18.59. The rand is staring at an intimidating uptrend if it fails to pull the pair below the red trend line around 18.43. A failed break below 18.59 will see the pair go on to test the 50-day MA at 18.92. For now the rand and the SA citizens brace for the market reaction to the SARB’s interest rate decision.
Over to the dollar, the greenback’s recovery is allowing it to dance with the 50-day MA at 105.84. A failed break above this rate will see the DXY slide into the support range around 104.73. It’s difficult to gauge investor risk appetite at the moment but I personally predict the current dollar weakness to be a bullish pullback for the greenback which will send the DXY to 107.11.
Shifting our focus to the commodity space, the price of Brent crude has now given back all of the gains since the start of the conflict in the Middle East. The 200-day MA price of $82 is the critical price level to watch. A failed break below will be an early sign of another 5-wave impulse high toward $100 pb.
An unorthodox chart to the pack is Bitcoin. Bitcoin has now gained roughly 35% in the past four weeks. The price of Bitcoin is always an interesting one as it is a good barometer to measure risk sentiment and the recent run along with the recovery in US equity markets, is starting to bend the needle.
