ZAR/JPY Wobbles!

ZAR/JPY Wobbles!

ZAR / JPY worried perched on the support before the municipal elections.

Tomorrow, the vote of South Africa in the local elections. Although the elections themselves are on a local level, which will be closely monitored by the South Africans and international investors as well, is the model of voting. The ANC since the end of apartheid has consistently questioned above 62% at all levels. Dissatisfaction with the regime of President Zuma and the country's economic management has increased.
A big boost against the ANC will give momentum to reformers within the ANC who are casting a nervous eye to the 20149 federal election. It will also be positively considered the economic point of view, it will definitely give a boost to the reformists within government and without.

Conversely, a better than expected ANC would have the opposite effect. The power of President Zuma will be seen as consolidated, and much needed reforms will be much less likely to occur. Expect investors to take a dimmer view of the second result as well and perhaps see the ZAR come under pressure. (USD / ZAR higher)

This uncertainty is unfortunate in its schedule for carry traders have long suffered. Coming as it does after a disappointing reaction to both the BoJ decisions and a lukewarm response to the LDP's stimulus package. JGB was a strong selloff yesterday and rising yields and the USD saw above / JPY sold hard during the week. Touching 100.60 this morning in Asia.

This downward pressure put on one of the favorite carry trades there, ZAR / JPY, now sitting on both weekly and daily support.

Weekly support comes by 7.1860, which is a high-low multiple previous / (denoted by the red dashed line). A weekly close under here to open a passage to the next bracket 6.9150 from a technical point of view.

Things are much better on the daily chart with either ZAR / JPY has broken the 0 DMA at 7.2810 and sitting just above the 100 DMA 7, 1760. A daily close below here opens a test of the top of the Ichimoku cloud at 7.0915. Resistance is at 7.2810 (0 DMA) and a multiple well anchored high on candles every day at 7.4450.

This is without doubt clear that the next 48 hours will be those for carry traders nervous on that cross! confluent events gather in the rather unfortunate timing.

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