USD/ZAR: Failed To Make Fresh High
Razvan Podariu | Nov 12, 2014 05:37AM ET
The Stock market Indexes are making new fresh highs, the safe havens like JPY, CHF or gold are sold off and also the bonds are being sold off lately. What is this meaning? That we have a RISK ON environment. The only thing that is not fixing in this picture are the high yield currencies being on their lows. If the investors are looking for higher returns (they buy stocks don't they?) how come they are not taking the same risk in the currency market?
In the good old times, when we had a risk on environment, currencies like NZD, AUD, MXN, TRY or ZAR were flying. The central banks from New Zealand, Australia, Mexico, Turkey or South Africa are paying 2% up to 8.25% interest rates and the high yields starved investors would not think twice to buy them.
USD/ZAR made a high of the year in January 2014 at 11.3800. On October 3rd had an attempt to break it but it failed. Now the rate action is close to that area as it went up to 11.3567 on November 7 but again it failed to make a new fresh high.
The target of the double top pattern is 11.0200 - good support in the past also. Under 11.0200 we have to look at 10.8300 for the next support. In this moment I am only concerned for the USD/ZAR not to go above 11.3280 so if you plan to short this currency pair take that area in consideration to place your stops.
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