SSA FX: Technical Breaks Reinforce Our Caution

We are becoming increasingly bearish towards Sub-Saharan African (SSA) FX given the ongoing trends for euro weakness, US dollar strength and a deteriorating outlook for regional macroeconomic fundamentals. We highlighted on September 6 that a number of SSA currencies were close to key support levels (see 'Market Strategy Update: Bearish Equities, Cautious FX' on our online service). Some of these levels have now been taken out, reinforcing our cautious stance. We anticipate that the South African rand, Mauritian rupee, Ghanaian cedi and East African shillings will experience weak trading over the short term. The Zambian kwacha has yet to make a bearish break, but we will be watching key support closely.

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