The Rand softened in the opening session of the new week after President Donald Trump cast doubt over the prospects of a trade deal being reached with China over the coming weeks, although the South African currency is being tipped as a buy at Bank of America Merrill Lynch.
The Rand's gains forced the GBP/ZAR exchange rate to 'gap' lower when markets opened Monday, and our studies of the 4hr chart - used to determine the short-term outlook which includes the coming week - shows the pair falling steeply towards an important trendline.
The Rand swept higher against most rivals Monday as investors expressed relief over a Moody's decision to leave South Africa's 'investment grade' credit rating unchanged in November, although local analysts are saying the currency is not out of the woods yet.
The Rand slumped Wednesday after Finance Minister Tito Mboweni shocked the market with a mid-year budget update that showed South Africa's deficit rising sharply this year, which is set to fuel a meteoric rise in the national debt over coming years, just days ahead of Moody's next credit rating review.
The Rand slumped Tuesday as investors expressed disappointment with the government's latest plan for turning around the ailing power utility Eskom, which has arguably been seen as too little, too late by a market that's uneasy ahead of Wednesday's budget and Friday's rating decision from Moody's.
The Rand made solid gains this week but is being tippedas a sell by at least one major bank ahead of the October 29 budget, while local analysts are warning of volatility heading into the November 01 Moody's rating decision.