ZAR: Rand Inches Higher, Consolidates Weekly Gain
USD/ZAR has edged lower, losing ground for the third day in a row. The pair last deals at 18.4248, just a touch lower on the session, with bears looking for losses beyond Jan 24 low of 18.3022. Conversely, bulls keep an eye on Jan 13 high of 19.2296.
- President Ramaphosa struck defiant note in his SONA when he touched upon recent tensions with the US, declaring that South Africa "won't be bullied". The leader reaffirmed the coalition government's intention to continue with its reform agenda, targeting a GDP growth rate of 3%.
- Ramaphosa is set to attend a high-stakes summit with Rwandan President Kagame and DRC President Tshisekedi in Tanzania over the next couple of days to discuss the situation in Goma, where South African troops clashed with Rwandan-backed M23 rebels.
- SAGB yields have recovered from early lows and are now modestly positive on the day. South Africa's 5-year and 10-year breakeven inflation rates sit at 4.31% and 5.46% respectively.
- The composite BBG Commodity Index has added 0.4%, the precious metals subindex is 0.5% better off.
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USDCAD TECHS: Bull Flag
- RES 4: 1.4676 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4360 @ 08:04 GMT Jan 8
- SUP 1: 1.4326/4280 20-day EMA / Low Jan 6
- SUP 2: 1.4232 Low Dec 17
- SUP 3: 1.4163 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD traded lower Monday. The trend set-up remains bullish and the move down is considered corrective. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. 1.4326, the 20-day EMA, has been pierced. A clear break of the EMA would open 1.4163, the 50-day EMA.
AUDUSD TECHS: Resistance Remains Intact
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6388 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6269/0.6302 20-day EMA / High Jan 6
- PRICE: 0.6227 @ 08:00 GMT Jan 8
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair has pulled back from Monday’s high. Recent weakness maintains the price sequence of lower lows and lower highs. Note that MA studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6269, 20-day EMA. It has been pierced. The 50-day EMA is at 0.6388.
STIR: SFRZ6/U7 Lifted
SFRZ6/U7 paper paid 6.5 on ~6.3K, initially taken bid over with a further ~3.2K trading since. Market left 6.0/6.5 last.
