South Africa 40 Cash Index breakout in news heavy week
The South Africa 40 Cash Index looks to be renewing a move higher although inflation data and meetings from the Fed, BOE and ECB could make for a bumpy ride.
The South Africa 40 Cash Index has broken above the dotted trend line on our chart suggesting that short term gains are renewing in line with the longer-term upward trend bias in play.
69520 and 70150 are our respective upside targets, while a close below 67440 might be used as a stop loss consideration for the trade.
It should however be noted that we are in a week filled with high impact news which could provide increased risk and in turn volatility over the next few days.
Key data this week
Today’s US CPI inflation data print provides a precursor to tomorrow’s (Wednesday 14 December 2022) Federal Reserve Open Market Committee (FOMC) meeting, interest rate decision and policy statement.
Thursday (15 December 2022) will see the Bank of England (BOE) and the European Central Bank (ECB) concluding their Monetary Policy Committee (MPC) meetings and most likely raising interest rates as well.
All three central banks are expected to raise lending rates by 50 basis points (0.5%) although it is the commentary which follows which will be most material for traders. Traders will be looking for any clues that the pace of monetary tightening might start to slow in future.
Cash adjustment / Dividend
The South Africa 40 Cash index did see a cash adjustment of 8 points on Monday, rather than Tuesday in lieu of the shortened trading week.
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