South Africa's rand trapped between key levels
Nov 21 (Reuters) -Long-term moving averages are containing the USD/ZAR market despite volatility driven by risk aversion and a flight to safety.
A tentative recovery in USD/ZAR from levels approaching the 100-day moving average support at 17.8512, with dollar bulls eyeing the 200-day moving average, today at 18.2617. Both levels have contained the market, on a closing basis, since Nov. 11, with the slower average holding back the dollar since June.
An improving domestic backdrop has, to a degree, insulated the rand from much of the geopolitical and global growth concerns but any gains are likely to be limited.
Carry trade attraction is still fighting the rand's corner although the interest rate margin is likely to narrow again later today. The South African Reserve Bank (SARB) is expected to cut its benchmark rate by 25-basis points, matching the U.S. Federal Reserve's cut earlier this month. The SARB is likely to cut again in December but an early 2025 easing can't be ruled out.
In the near-term USD/ZAR volatility will continue to be mainly driven by external factors and interest rate differentials but a period of steadier price action between the 100 and 200-day moving averages could be on the cards.
For more click on FXBUZ
USD/ZAR daily candle chart: https://tmsnrt.rs/3CEMDkO
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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