Forex Market: USD/ZAR daily trading forecast

Yesterday’s trade saw USD/ZAR within the range of 10.6889-10.6006, the lowest in more than a week. The pair closed at 10.6122, down 0.68% on a daily basis.

At 8:14 GMT today USD/ZAR was up 0.20% for the day to trade at 10.6468. The pair held in a daily range between 10.6032 and 10.6481, touched at 7:57 GMT.

Fundamental view

United States

The US Department of Commerce will release its revised preliminary reading on US GDP growth at 12:30 GMT. According to analysts’ projections, the world’s biggest economy probably expanded by 3.9% in the second quarter, compared to the initial reading of 4.0% and the first quarter’s 2.1% contraction.

The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a country’s economic activity. The report on GDP holds a lot of weight for traders, operating in the Foreign Exchange Market. It serves as evidence of growth in a productive economy, or as evidence of contraction in an unproductive one. As a result, currency traders will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency.

Separately, the Labor Department is expected to report that the number of people who filed for initial unemployment benefits in the week ended August 23rd rose to 300 000, up by 2 000 from the preceding period.

Additionally, the index of pending home sales in the United States probably rose 0.5% during July compared to June, when sales unexpectedly dropped by 1.1%..

When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator, the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.

The National Association of Realtors (NAR) will release the official index value at 14:00 GMT. In case pending home sales increased more than anticipated, this would have a bullish effect on the greenback.

South Africa

Statistics South Africa is expected to report at 09:30 GMT that Julys production price index rose by an annualized 7.9%, compared to 8.1% a month earlier. Month-on-month, production prices are expected to have risen by 0.3%, matching the preceding months growth.

The PPI index measures the average changes in commodity prices in South Africas primary markets. It consists of two types of indices: output indices which measure changes in prices received by producers and input indices which measure changes in the cost of production, excluding labor and capital costs. The input indices cover the prices of fuel and electricity, materials, transport and communication, commission and contract services, rent and lease of land, buildings, vehicles and plants, business services, insurance premiums less claims.

Generally speaking, improving and better-than-expected readings are seen as bullish for the local currency, and vice versa.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 10.6339. In case USD/ZAR manages to breach the first resistance level at 10.6672, it will probably continue up to test 10.7222. In case the second key resistance is broken, the pair will probably attempt to advance to 10.7555.

If USD/ZAR manages to breach the first key support at 10.5789, it will probably continue to slide and test 10.5456. With this second key support broken, movement to the downside will probably continue to 10.4906.

The mid-Pivot levels for today are as follows: M1 – 10.5181, M2 – 10.5623, M3 – 10.6064, M4 – 10.6506, M5 – 10.6947, M6 – 10.7389.

In weekly terms, the central pivot point is at 10.6714. The three key resistance levels are as follows: R1 – 10.7718, R2 – 10.8510, R3 – 10.9514. The three key support levels are: S1 – 10.5922, S2 – 10.4918, S3 – 10.4126.