The USDZAR pair jumped today as traders reflected on the weak inflation numbers from South Africa. The pair is up by almost 0.40% and is trading at 17.3095, which is higher than the day’s low of 17.1718.
South African rand falls as SA inflation falls
The USDZAR rose slightly after the South African Bureau of statistics released weak inflation numbers. The data showed that the headline consumer prices declined by 0.5% in April as the country moved into a lockdown. The prices had risen by 0.3% in the previous month. According to the bureau, the prices rose by 3.0% in April after rising by 4.1% in March on an annualised basis.
The core CPI, which excludes the volatile food and energy products, declined by 0.3% after rising by 0.6% in March. This was the steepest decline of prices in years. The core CPI rose by 6.0% on a year on year basis after rising by 5.8% previously. These numbers show that the economy is really struggling amid the pandemic.
The data came a day after the office released another set of disappointing employment data. The numbers showed that the unemployment rate rose to 30.10% in the first quarter. This happened after the number of the unemployed rose from the previous 6.7 million to more than 7.1 million.
But South Africa seems to be solving the problem. In the latest statement, the country said that it would spend more than $133 billion to boost infrastructure. The project is expected to create more than 1.8 million jobs.
The big issue is that the amount is enormous for South Africa, a country that has seen three rate downgrades this year. Also, the country has a GDP of more than $368 billion and a debt of more than $77 billion.
The USDZAR pair is trading at 17.3095, which is higher than the day’s low of 17.1715. On the daily chart, the price has also formed an ascending channel, which seems like a bullish pennant pattern. The price is also between the 50-day and 100-day exponential moving averages. Therefore, the pair may continue rising today as bulls attempt to test the upper resistance level at 17.7000.
However, a break below the lower support at 17.1715 will invalidate this trend. This price is along the ascending support and along the 100-day exponential moving averages.