The USD/ZAR jumped above the 19.00000 level in early trading this morning, after financial institutions reacted to U.S President Trump’s decision to put South Africa’s land seizure law into focus.
The USD/ZAR as of this writing is flirting with the 18.97000 ratio and readers are advised to watch the value of the currency pair closely if they are considering pursuit. As written here last week, President Ramaphosa signed a land seizure law, giving the South Africa the right to take land from its owners without compensation. Apparently Donald Trump and his White House administration took notice.
This morning the USD/ZAR gapped higher, Friday’s close was around the 18.64000 level, the jump upwards as trading started today took the currency pair to nearly 19.03400. The spread in the USD/ZAR is still wide at this time and speculators who want to wager need to use strict risk management including entry price orders. The USD/ZAR is likely to remain turbulent short and near-term.
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USD/ZAR Reaction in Financial Institutions
After being able to create a calm trading atmosphere for the USD/ZAR the past eight months, the signing of the land seizure law in South Africa highlighted that controversial politics have not ended in the nation. It was announced late yesterday that President Trump will cut funding to South Africa. The move by the White House is directly linked South Africa’s land seizure law.
The USD/ZAR’s ability to jump over 19.00000 on the opening this morning and its flirtation with the higher realm is clear sign from financial institutions they are nervous about outlook once again. True, the USD/ZAR has traded at higher ratios before and has reversed lower. However, with the U.S White House now is firmly looking at South Africa’s policies, traders may want to consider the potential the South African Rand is more vulnerable.
Real Actions and USD/ZAR Ramifications
The move by the U.S White House is not merely noise. The cutting of funds to South Africa has the potential to cause financial disarray regarding programs that use U.S cash. The implication that last night’s action by Trump is only the first of other possible moves will not give South African based financial institutions comfort in the coming days.
- The USD/ZAR is testing it higher realm and will likely continue to do so.
- Speculators can clearly see the currency pair has tested higher levels before, and it isn’t farfetched to believe that ramifications because of the U.S moves will cause a further erosion of confidence in the South African Rand.
- Traders should remain realistic and not bet blindly, volatility will be seen and produce more surprises.
- Will President Ramaphosa back away from the land seizure law?
USD/ZAR Short Term Outlook:
Current Resistance: 18.98200
Current Support: 18.93500
High Target: 19.05200
Low Target: 18.89600
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