Last week was a significant data week for the markets as a whole. The PMI figures from several nations were mixed, but the generally upbeat feeling persists as the economy recovers from the effects of restrictions. Consumer price inflation in most European nations and Korea increased due to geopolitical tensions.
While the RBA and the Bank of Canada held interest rates constant, the general tone is hawkish as inflation spirals out of control. The most major news that attracted investors was the Russian Central Bank's decision to raise interest rates to 20%; these efforts to salvage the Ruble led to the Ruble falling to historic lows.
Technical Analysis
Commodity prices have buoyed the South African market since the beginning of the Russian invasion; however, despite losing ground against significant peers such as the NZD, AUD, CHF, GBP, JPY, and USD over the last week, it remains stuck between a rock and a hard place ahead of GDP, manufacturing, and current account data this week.
The rand has bounced from headline to headline, but it may come under pressure as the Fed raises interest rates in the coming weeks.
The rand's long-term resistance range continues between 15.50 and 15.70 USD/ZAR. Considering the long-term bullish channel for 247 days up to mid-February due to increased commodity prices and US inflation, which boosted the rand.
On the 4-hour chart, the USD/ZAR is presently in a short-term bullish channel. As we get closer to the US interest rate hike, we expect the dollar to rise over 15.38 in the immediate term.
While investors expected the Fed to raise interest rates by 50 basis points, emerging markets rose on Jerome Powell's comments that a 25 basis point hike at the next meeting will suffice given supply restrictions caused by Russian sanctions.
Gold
If the Ukraine-Russia discussions do not proceed as planned, we predict gold to exceed the $2000/oz mark this week. The standard deviation shows that price movements are still skewed and are moving away from the mean price.
We believe that a price drop will be caused by numerous investors booking profit. Russia's massive operations in Ukraine, along with the persistent disregard for sanctions from the West, have the potential to propel the gold price beyond $2075/oz. A near-term support level will be around $1960/oz.
