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.

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

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA 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 CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.