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USDZAR forecast: South African President Jacob Zuma will be ousted?
12/01/2018
USDZAR forecast: South African President Jacob Zuma will be ousted?

Will South African President Jacob Zuma will be ousted? An analyst at Swissquote has hinted that the Markets think so. What impact will that have on the USDZAR pair?

12 January, Swissquote – Speculation has increased over the removal of South African President Jacob Zuma. Judging from the rapid appreciation of the ZAR most of the good news in regards to political stability is already pricing in. However, a smooth transition will pressure USDZAR down further. In order to ensure a Zuma exit, the ANC has likely negotiated avoiding prosecution and compliance with standard legal procedures.

This open Zuma to resign in the next few months giving Cyril Ramaphosa the ability to end scandal-ridden government without breaking the ruling party into self-destructing factions. Despite the minor correction high beta EM currencies, we remain bullish due to broader macro-conditions.

South African President Jacob Zuma Will Be Ousted?

Is South Africa’s President Jacob Zuma about to be ousted? Markets think so, judging from the rapid appreciation of the ZAR, which is pricing in improved stability and decreased corruption. A smooth transition will press USDZAR down further.

The positive scenario is that Zuma will resign in the next few months, and Cyril Ramaphosa will succeed him without massive turbulence or the ruling African National Congress party (ANC) breaking self-destructing factions. Despite the minor correction in high-beta emerging market currencies, we remain bullish on the Rand.

EU growth pushes Euro

A broad uptrend in European Union economies is clear: European industrial production ended 2017 up 3.2%, with strong contributions from Germany, Italy, and Spain among others. Just in the past days, Italian retail sales in November came in higher than expected and German GDP clocked a 2.2% rise on the year.

What comes next is the European Central Bank’s normalization of monetary policy. We think this is coming sooner rather than later. We also expect to see the EUR/USD appreciate above its current 1.20 range.

Disclaimer

This article USDZAR forecast: South African President Jacob Zuma will be ousted? was written by Peter Rosenstreich & Vincent-Frédéric MIVELAZ, Market Analyst at Swissquote.

While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein.

This document does not constitute a recommendation to sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investments.

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