USD/ZAR Outlook:
The USD/ZAR is currently slightly weaker but likely to move sideways, trading below its recent average and near recent lows. A downward pressure on the US dollar from upcoming forecasts may counteract any gains from the positive US jobs data.
Key drivers:
• Rate gap: The US Federal Reserve's monetary tightening contrasts with the South African Reserve Bank's recent interest rate cut, affecting the relative strength of the currencies.
• Risk/commodities: Higher oil prices could support the South African Rand as they enhance commodity export earnings.
• One macro factor: A forecasted contraction in US durable goods orders may add pressure on the dollar as it highlights potential economic weaknesses.
Range:
Upcoming volatility suggests the USD/ZAR will likely drift within its recent 3-month range without breaking extremes.
What could change it:
• Upside risk: Stronger-than-expected US job growth could bolster the USD.
• Downside risk: Further declines in US durable goods orders may weaken the USD.