S&P downgrades SA’s local currency debt to ‘junk’ status While Moody’s issues a warning. (full article www.moneyweb.co.za)
USDZAR and EURZAR Bears will look to sell because of the carry. USDZAR and EURZAR Bulls will look to buy because they forecast a continuation of Zar weakness as a result of the news and lack of confidence in the South African Government’s ability to do what is required to steer South Africa back on track as we head into the ANC conference and 2018 budget. Trading as we head into the ANC December conference is probably going to be quite sensitive to the news so tread carefully.
A weaker Dollar saw a more limited move in USDZAR when compared to EURZAR as a result of a stronger Euro. Keep an eye on the strength/ weakness of USD and Euro when trading against a strong/ weak ZAR.
Best of pips friends.