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Rand Rallies on Powell’s dovishness and Ramaphosa’s reappointment of CB gov

The South African rand strengthened after the Fed signaled increased openness to a rate cut and after South African President Ramaphosa reappointed his central bank chief.  South African central Bank (SARB) governor Lesetja Kganyago term was dues to end in November and markets will support his reappointment for another five years.  Central bank independence is growing concern globally, with the recent firing of the Turkish central bank head by Turkish President Erdogan and President Trump’s constant criticism of the Fed.  Kganyago’s nod to lead the central bank will ease concerns that the bank will be easily influenced by political pressure.  Some analysts were concerned that a populist could have been put in place.

The South African rand broke below the 14.000 level  and could see further support at 13.628, which is the 78.6% Fibonacci retracement level 2019 low to high move.  To the upside, the 200-day SMA, which currently trades around 14.210, could provide strong resistance.

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Emerging markets across benefited across the board following the Powell’s dovish testimony.  The lira rallied 1.0% while the Mexican peso paired most of its earlier losses.

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Ed Moya

Ed Moya [5]

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya