#BRICS currencies movement for the week – 15 November 2019

Another great week for the South African Rand, bucking the trend of most BRICS currencies. Most BRICS currencies lost some ground during the week (against the USD), with only the Rand improving.

VERY IMPORTANT TO NOTE – it’s MPC meeting this coming week, with the interest rate announcement on Thursday (21 November). This could see the Rand improving closer to Thursday with the anticipation of a possible rate decrease. As it currently stands (according to the Thomson Reuters Poll), 21 out of the 28 (therefore 75%) economists see the Repo Rate left unchanged, with the remaining 25% expecting a 25 basis point decrease. Should rates remain unchanged, should see the Rand remain stronger, while a decrease could see some Rand weakness.

#BRICS currency/USD movements for this week:

Brazil -0.8%
Russia 0.0%
India -0.4%
China -0.2%
South Africa +1.0%

Euro/USD +0.3%

Technically, the Rand dropped below a very downward sloping 50-day moving average again this week and end the week at the bottom of a very strong Symmetrical Triangle support line. This level (R14.65) remain a strong support level for this coming week, with a break and close below, most probably placing us back at the R14.50 levels. This support level also corresponds with the 200-day moving average. A break below this level, could see us targeting the primary support at R13.85 again.

Even at the current levels, the USDZAR still don’t find itself at oversold (overbought Rand) according to its 14-day RSI, which tells me that a possible breakthrough the Symmetrical Triangle could very much bring those R14.50 levels fairly quickly.

Should the support however hold and bring some weakness, could see the Rand seeking resistance only at the 50-day moving average (R14.86) again, with a break and close above these levels, most probably testing the R15 levels again. Next resistance level is R15.13.

My call for this coming week – I’ll stay neutral for now, with a confirmation of a breakthrough the Symmetrical Triangle changing my view to bullish on the Rand (target R14.50).