With the constant mainstay of high-levels of load shedding in South Africa, and the crisis that energy production has become over the last few months, we should expect a quite a show on Wednesday as the budget for 2023 will be announced. This news is within the same day the United States FOMC meeting minutes hence this week we should expect wild volatility. In light of this upcoming news events how should we traders prepare to engage the market this week.
Today in South Africa one of the economic issues that are plaguing the county is the constant load shedding that has been growing ever so prevalent. The levels of Load shedding have grown so high that the President has had to declare that the country is in a state of emergency. In this budget release will be able to ascertain the priorities of the South Africa and determine the direction that the governments vested efforts are likely to take the country. One would hope to see that there will be ample provisions made for the recovery of the energy sector.
On top of this high profile economic news that is bound to cause Volatility within the USDZAR is the coming FOMC meeting minutes. Recently the US received good news of a strengthening dollar. Hence the interest rate decision of the FED is bound to be influential as they may decide to continue hiking interest rates to continue the trend, or they may decide to keep them the same or lower in response to declining inflation. This decision is important as it determines the amount of interest that will be generated towards businesses taking out loans. The lower the interest rate the more people who are interested in taking out loans, a higher interest rates will create the opposite effect.
What should we do as traders
The combination of these major economic news events of these two countries bound to cause a lot of volatility to the USDZAR hence it is best to mark Wednesday as a day of careful trading. Before the announcements make sure to mark out the areas on the chart that will feature a high amount of interest (major support and resistance) and get ready for spikes to that area and trade accordingly. Be sure to keep your lot sizes reasonable as the market may share you out on your first try so be careful.
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