The stellar jobs report of 6 August could be a trigger that wipes out the carry trade opportunity. The USD/ZAR is one of the currencies which saw this opportunity, allowing the higher-yielding Rand to gain against the greenback from March 2021 till mid-June when the FOMC released a hawkish statement that began to unwind this opportunity.
As the unemployment rate fell from 5.9% to 5.4% and the number of jobs added to the US public sector beat expectations, the position of Vice-Chair of the Fed Richard Clarida on early tapering may have been cemented.
The prospect of early tapering and the positive impact this will have on the greenback eliminates the carry trade opportunity, which will ultimately boost the value of the USD/ZAR.
The USD/ZAR is up 1.23% as of writing and looks set to end the week higher.
The daily candle looks set to test the 14.71708 resistance. If this level is uncapped, 14.89528 becomes a new target. If the price advances further, the bullish reversal is complete and the price may resume a march towards 15.08661 and potentially 15.21122.
On the flip side, a rejection of the upside move at 14.71708 could lead to a pullback that aims for 15.52955. If prices dip further, 14.39768 and 14.28370 could be up for grabs, as could 14.15360.
Follow Eno on Twitter.