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After a bearish run in the last few weeks of 2019, the USDCZK pair has finally bounced back. Bulls are trying to keep the momentum despite the odds against them. The pair is currently steadying following the week home sales report that was recently released from the United States. Yesterday, the US Census Bureau issued the new home sales for December which unexpectedly dropped from 697K to 694K, disappointing investors and experts who forecasted 730K improvement. Meanwhile, also yesterday, the US Department of Commerce released the month-over-month new home sales for December which failed to bounce back as it only rose to -0.4% from -1.1%, not being able to reach expectations of 1.5%. On the other hand, the strong producer price index from the Czech Republic wasn’t enough to push the US dollar lower against the Czech koruna. The year-over-year PPI hiked from 0.9% to 2.1%, inching past projections of 2.0% prior.
With the weak figures produced by Turkey’s economy and the slash in Turkey’s one-week repo rate, the Turkish lira will continue to falter against the greenback. The USDTRY pair is expected to gradually climb to its resistance and reach it by the first few days of February. After the Central Bank of the Republic of Turkey eased its one-week repo rate earlier this month the Turkish lira barely stood a chance to rally. The repo rate was reduced down to 11.25% from 12.00%, catching experts off guard as they were only expecting a 0.5 basis point cut. Meanwhile, Turkey’s capacity utilization fell down from 77.0% to 75.5% in January according to TURKSTAT, or the Turkish Statistical Institute. Aside from that, the intense protests across the country to oppose the so-called “marry your rapist” law, which legitimizes child marriage in the country, is turning off investors, giving way for the buck to steadily overpower the Turkish lira in the market.
The mixed results produced by the Brazilian economy is paving the way for the US dollar to overtake the Brazilian real in the market. The pair is believed to hit its resistance by the end of the month or perhaps on the first few days of February. The safe-haven appeal of the US dollar also comes into play as the Wuhan, China-originated coronavirus continues to weigh in heavily on traders. Just recently, the Ministério do Trabalho e Emprego of Brazil released the CAGED net payroll jobs report that showed a massive contraction from 99.23K to -307.31K in December, despite that, the results still came in better than the -320.00K projected prior. Meanwhile, the composite and services PMIs from the United States continue to give a slight lift to the greenback against the Brazilian real. And the good projections for more upcoming reports from America’s economic activities are also helping give the buck support.
The recent interest rate cut from the South African Reserve Bank continues to weaken the South African rand against the US dollar. The ripples of the rate cut are still felt by the currency as the market was caught off guard. Prior to the 0.25 basis point cut, experts projected that SA Reserve Bank will leave its official interest rates unmoved at 6.50, instead, they opted to trim it to 6.25%. Aside from that, the safe-haven appeal of the US dollar is attracting more investors as the coronavirus outbreak continues to weigh on the market. Aside from that, the series of weak results or small improvements, from South Africa’s economy is not making it any better for the rand. Not to mention, most of the incoming reports about SA’s economy also have weak projections, putting intense pressure on USDZAR bears. Just recently, South Africa’s core consumer price index was released showing contraction from 3.9% to 3.8% on a year-over-year basis.