Trimmed S Africa’s GDP Growth Outlook Turns Rand Bearish

South Africa RandOn 29th September 2016, we recommended taking a LONG position in USD/ZAR pair at 13.50 with a target level of 13.90. Similarly, we suggested a one-touch call option for the binary traders.

Within a matter of one week, the target was hit. The currency pair USD/ZAR went ahead and hit a high mark of 14.49205 and consolidated at that level. However, the currency pair dropped to 13.85 levels after mixed US economic news. We have discussed reasons underneath where we are expecting a bullish reversal from the current level.

John Williams who is the president of San Francisco told people in an interview with the Wall Street Journal that he is anticipating one rate hike this current year and expecting the same to come in December.

The New York Fed President William Dudley who is regarded as a close ally to Yellen believes that the Fed should act in the December month this year. Ian Lyngen, who is the US rates strategy head at BMO Capital Markets believes that the intentions of the US Fed will be clear by the end of this week. A survey was conducted amongst the analysts where it was found that the probability of hike rate in December has strengthened to 74 percent.


Pravin Gordhan who is the Finance Minister in South Africa has downwardly revised GDP growth estimates from 0.9 percent growth outlook issued in February to 0.5 percent in 2016. He announced in the midterm budget policy statement last week. The economists are praising the decisions made by Gordhan in this respect, and they want Gordon to revive the confidence of the investors. The verbal attack by President Jacob Zuma’s supporters along with political uncertainty, huge debt, wasteful expenditure and the unemployment rate continues to threaten a downgrade by the rating agencies. Thus, we can easily anticipate that the currency pairs USD/ZAR will remain bullish in the coming time.

The currency pair charts USD/ZAR is trending around the support level of 13.85. There is also a positive divergence in the price. It can be easily anticipated that the currency pair will rise in the future.

USD/ZAR Pair - October 31st 2016

USD/ZAR Pair: October 31st, 2016

Under the said circumstances, it is imperative on the part of a currency trader to take a LONG position in USD/ZAR currency pair around support level. To minimise the losses incurred by the forecast as mentioned above, one can place a stop order below 13.70. Once the currency pair reaches the next resistance level of 14.25, the LONG position can be closed accordingly.

If you are a binary options trader, you can bet on the rising trend of USD/ZAR pair and purchase One-Touch “Call” option. Success is guaranteed as long as the strike price is below 14.25. At the same time, you can boost your chances of success by choosing an expiry period in last week of November.

No comments

Write a comment
No Comments Yet! You can be first to comment this post!

Write a Comment