The South African rand had a strong performance in August, even as the US implemented tariffs against the country. The USD/ZAR exchange rate tumbled to a low of 17.4, its lowest level since November 2024, and 12.6% from its highest level this month. 

Why the South African rand has surged

The USD/ZAR exchange rate retreated as the coalition government between the ANC and the Democratic Alliance held strong one year after its formation. The administration is carrying out some of the much-needed reforms that will stabilize the economy and its key sectors. 

Further, the rand has jumped as investors downplay the impact of Donald Trump’s tariffs. Trump implemented tariffs of about 30% on most goods coming from the country. These tariffs are substantial since the US is one of its biggest market. 

Analysts and industry groups warn that the tariffs will have a major impact on the economy, with job losses being in the thousands. Also, the potential pivot to Asian countries will likely take time.

The South African rand strength is a sign that investors expect the economy will maintain its resilience over time. Some of the analysts cite the rising commodity prices, like gold and platinum. 

The USD/ZAR price also reacted to the carry trade opportunity, where investors borrow from a country with a low interest rate and invest in one with a higher yield. While the South African central bank has cut rates recently, the benchmark rate remained much higher than that in the US. In a note, an analyst said:

“Data points to good inflows into the rand, and other higher-carry currencies, funded either from Asia or the US dollar itself. There’s space for the currency to continue to do well into year-end.”

Additionally, the ongoing South African stock market rally has contributed to the ongoing rand jump as foreign investors buy the rally. The closely watched JSE Top 40 Index, which tracks the largest companies in the country, peaked at ZAR 94,000, up nearly 30% from the year-to-date low. 

JSE Top 40 Index chart | Source: TradingView

The weaker US dollar index has also contributed to the ongoing USD/ZAR performance. Data shows that the US dollar index was trading at $97, down sharply from the year-to-date high of $110. 

The US dollar index may continue falling now that the Federal Reserve has hinted that it will cut interest rates. In a statement at the Economic Club of Miami, Governor Cristopher Waller said:

“With underlying inflation close to 2%, market-based measures of longer-term inflation expectations firmly anchored, and the chances of an undesirable weakening in the labor market increased, proper risk management means the FOMC should be cutting the policy rate now,”

USD/ZAR technical analysis

The daily timeframe chart shows that the USD/ZAR exchange rate has been in a downward trend in the past few days. It has dropped below all moving averages, a sign that bears are in control. 

The pair has formed a head-and-shoulders pattern, a common bearish sign. Therefore, it will likely continue falling as sellers target the key support at 17.00. Such a drop would mean a 3.9% drop from the current level.

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The EUR/USD exchange rate was flat this week as market participants reflected on key events, including the statement from Jerome Powell and the important macro data from the United States and Europe. It was trading at 1.1665 on Friday as investors waited for the upcoming US PCE report. 

Focus on the US monetary policy

The EUR/USD pair moved sideways as investors reacted to the ongoing happenings on the US monetary policy following last week’s statement from Jerome Powell on interest rates.

In his speech at the Jackson Hole Symposium, Powell noted that the bank would likely start cut interest rates, citing the developments on the labor market, which has deteriorated in the past few months.

The view was supported on Thursday by Christopher Waller, a Fed governor who has advocated for rate cuts in the past few months, and who is being considered to replace Jerome Powell when his tenure ends next year.

Waller has always argued that cutting rates would be appropriate as inflation remains subtle and that the risks to the labor market are significant. He said:

“With underlying inflation close to 2%, market-based measures of longer-term inflation expectations firmly anchored, and the chances of an undesirable weakening in the labor market increased, proper risk management means the FOMC should be cutting the policy rate now.”

The EUR/USD exchange rate also reacted to the latest US consumer confidence data, by the Confirmed Board. This report showed that confidence dropped this month, likely because of the rising unemployment rate and the rising consumer inflation in the country.

On the positive side, the Bureau of Economic Analysis (BEA) reported a strong GDP number on Thursday. This report showed that the economy grew by 3.3% in the second quarter, higher than the previous estimate of 3.1%.

There are two important economic numbers that will move the EUR/USD  pair in the coming days. First, the US will publish the latest personal consumption expenditure (PCE) data later today. Economists expect the data to show that the headline PCE inflation rose by 2.6% in July, while the core PCE rose to 2.7%.

The other notable data to watch will be the upcoming US nonfarm payrolls (NFP) data, which will come out on Thursday Friday next week.

Economists expect the data to show that economy created 78,000 jobs in August, while the unemployment rate rose to 4.3%. A weak jobs report will likely lead to confirm the coming interest rate cut.

EUR/USD technical analysis 

The eight-hour chart shows that the EUR/USD exchange rate has moved sideways in the past few days. It has remained above the 50-day and 100-day Exponential Moving Averages (EMA).

The pair has formed an inverse head and shoulders pattern, which is often a sign of a bullish reversal. It is hovering slightly below this pattern’s neckline.

Therefore, the pair will likely have a strong bullish breakout in the coming weeks, with the next level to watch being at 1.1830. A move above the slanting trendline will confirm this breakout.

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The Indian rupee slump accelerated on Friday, reaching its lowest level on record as investors reacted to the ongoing trade conflict with the United States. The USD/INR exchange rate was trading at a record high of 88.20.

It is up by 5.17% from its lowest level in April this year, making it the worst-performing currency in Asia this year. 

Why the Indian rupee is plunging

The Indian rupee continued its strong downward spiral this week as market participants reacted to the ongoing trade tussle between the US and India. 

Trump has applied a 50% tariff on goods coming from the country, a move that Citi analysts believe will hit almost 1% of the GDP. Inia exported goods worth over $77.5 billion to the United States in 2024, an 11% increase from a year earlier. 

Many sectors will be impacted, including jewelry and clothing. Most importantly, the tariffs have reduced the appeal of India as a viable alternative to China. 

Most companies, such as Tesla and Apple, have recently expanded their operations in India to capitalize on the favorable relations with the US. 

Trump’s tariffs on Indian goods are in line with those of other countries. They also include a levy for its ongoing business with Russia as the war in Ukraine escalates. 

India is now working behind the scenes to reach a deal. At the same time, Narendra Modi is talking with China’s Xi Jinping as relations between the two countries improve. 

The ongoing trade conflict between the US and China will slow India’s economy, hurting the recent growth. Recent surve data showed that the economy expanded by 6.7% in the three months to June.

That growth was lower than its expansion of 7.4% in the first quarter, but higher than the 6.5% it expanded in the same period last year.

On the positive side, while India and the US do a lot of business, it still accounts for just 2% of the total GDP. 

Also, 60% of India’s economy is made up of domestic spending, which will likely keep growing as the Reserve Bank of India (RBI) cuts interest rates. It has already slashe rates by 100 basis points this year, and analysts see more cuts later this year.

USD/INR technical analysis

The daily timeframe chart shows that the USD/INR exchange rate has rebounded from 83.85 in May to 88.4 today as the rupee plunged. It moved slightly above the important resistance level at 88.18, its highest point in August and February. 

Soaring above that level invalidated the double-top pattern that was forming. It is also a sign that investors are comfortable buying above that price. 

Most notably, the USD/INR pair has formed a cup-and-handle pattern, a common continuation sign. Therefore, the pair will likely continue rising as bulls target the next psychological point at 90. 

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The Barclays, NatWest, and Lloyds share prices plunged on Friday, dragging the blue-chip FTSE 100 Index. NatWest stock plunged to 512p, down by almost 10% from its highest point this year. 

Windfall tax proposal drags Barclays, NatWest, Lloyds share prices

Lloyds share price plunged by over 7.2% from the year-to-date high, in line with our recent forecast. That prediction identified a giant rising wedge chart pattern on the daily timeframe.

Barclays tumbled to a low of 355p, down by over 6.17% from the YTD high. Other large bank stocks like HSBC and Standard Chartered also slumped. 

The main catalyst for the ongoing plunge is the renewed calls for Rachael Reeves to implement a windfall tax on these companies for benefiting in the high interest rate era.

The current pressure came from the Institute for Public Policy Research, which noted that these banks had benefited from state subsidies from the Bank of England’s quantitative easing that inflated prices. 

It is unclear whether Reeves, who faces a big hole in the budget will follow through the proposal, which the think tank argues would raise £32.5 billion in the next five years. It noted that the levy would even leave Reeves with an extra $3.2 billion. 

Bank have always opposed a windfall tax arguing that it would make the country’s financial sector unattractive. Their representative said:

“Banks based here already pay both a corporation tax surcharge and a bank levy. Adding another tax would make the UK less internationally competitive and run counter to the government’s aim of supporting the financial services sector.”

UK bank stocks have boomed

The call for a windfall tax comes at a time when the UK bank stocks have boomed this year. Lloyds share price has jumped to the highest point since 2007. 

Barclays stock peaked at 380p this year, the highest level since August 2007 and 515% above the lowest level this year. NatWest, which owns Coutts and Royal Bank of Scotland (RBS), crossed 500p, and moved to the highest level since 2008. 

These banks have all benefited from the era of high interest rates, which has helped them to buy back their stock and boost their dividends. 

The most recent results showed that Lloyds Bank’s net interest income rose to £6.65 billion in the year’s first half to £6.65 billion, up by 5% from last year’s £6.3 billion. 

Barclay’s net interest income rose to £7 billion from £6.1 billion, while NatWest’s figure rose by 13% to £6.1 billion. Still, analysts predict that the era of this profit boom may be ending as the Bank of England (BoE) slashes interest rates.

It is unclear whether the ongoing slump of top stocks of companies like Lloyds, Barclays, and NatWest will continue. However, the stocks could rebound if Reeves rules out windfall taxes.

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BT Group share price is in a strong bull run, moving to its highest point since 2017. It has risen in the last seven consecutive months, its longest winning streak since it went public over two decades ago. It has jumped by over 180% from its pandemic lows. 

Why BT Group share price is soaring

BT share price has jumped by over 52% this year, helped by its strong turnaround under Allison Kirkby and its improving business trajectory as shown in the last financial results.

These results revealed that its business is turning itself around. Its adjusted revenue came in at £4.87 billion, down approximately 3% from the same period last year. 

BT Group’s consumer business revenue dropped by 3% to £2.3 billion, while its struggling business segment dropped by 6% to £1.8 billion. 

OpenReach, its fibre business, was a top bright spot for the company as its revenue rose by 1% to £1.56 billion during the quarter.

While the company’s revenue declined during the quarter, the numbers were better than expected. It also reported some strong metrics, including a surge in OpenReach FTTP additions, which rose by 46% to 566k.

BT Group is benefiting from the ongoing turnaround strategy that includes cost optimizations, streamlining its international markets to focus on the United Kingdom, modernizing its business, and boosting financial efficiency.

On costs, the company is in the process of laying off over 55,000, a move intended to make it a leaner growth-oriented business.

The company is working to streamline its business segment that has continued being a thorn in the flesh. It is in talks with some entities like AT&T to sell it or partner. Kirkby is also focusing on the UK and possibly plans to fully exit the international markets.

BT Group is also working on improving efficiency and modernizing its business by leveraging artificial intelligence and cloud computing. Just this week, the company started a partnership with Amazon’s AWS that will see it use its tools across its business.

BT Group share price has soared as investors anticipate more profitability now that its OpenReach capital expenditure has likely peaked. As such, investors probably anticipate more dividends or even a restart of share buybacks.

BT Group is often seen as a good dividend company by income investors. It has a dividend yield of about 3.85%, higher than most FTSE 100 companies.

BT share price technical analysis 

The weekly chart shows that the BT Group stock price has been in a strong uptrend in the past few years, moving from a low of 94.18 in 2024 to the current 215p. 

This surge happened after the stock formed a double-bottom pattern at 94.18p and a neckline at 140p.  A double-bottom is a common bullish reversal pattern in technical analysis.

The stock has remained above moving averages during the ongoing bull run. While this is a bullish factor for the stock, other technical indicators are flashing warning signs. 

The Relative Strength Index has moved from the overbought point at 81 to 73, while the Stochastic Oscillator is moving sideways above the overbought level.

Therefore, the stock will likely pull back a bit, possibly to retest the support at 165p and then resume the bullish outlook.

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GoPro stock price is in a frenzy this year, as retail traders return. It surged by 36% on Monday, reaching a high of $1.70, its highest level since July, and 315% above its lowest level this year. This surge has brought its valuation to nearly $200 million. 

Why GoPro stock jumped as US equities slumped

The latest surge in GoPro stock price was notable because it occurred on the same day that the S&P 500 and the Nasdaq 100 Index declined. 

Its surge is also notable because the company’s business is facing substantial pressure as demand for its hardware and subscriptions wane. 

GoPro’s revenue crashed by 18% in the second quarter to $153 million, continuing a trend that has been happening for years. 

The revenue plunged as GoPro sold 500k camera units, down by 23% YoY. Most notably, its important subscription business was flat at $26 million as the number of subscribers fell by 3% to 2.45 million.

The only notable development in the financial report was its profitability. Its net loss was $12 million, an improvement from the $36 million it made in the same period last year. This growth happened because of its progress, including its job cuts. 

GoPro’s turnaround will be hard to implement because it is largely a one-product company. While its action cameras are market leaders, many buyers don’t upgrade them unless they break. 

Therefore, the GPRO stock price surged because it has become a meme company, as AMC and GameStop were a few years ago. A meme stock is a company whose shares perform not because of its fundamentals, but the sentiment of the trading community.

GoPro meets this criteria because, like GameStop, it is a fallen angel or a company that was once popular and one that has lost its shine.

It is also a highly shorted company with a short interest of 10%. Historically, these highly shorted companies are always exposed to short squeezes as we saw with GME and AMC.

Therefore, the stock may continue rising in the near term as investors start pondering about the upcoming interest rate cuts by the Federal Reserve. In most cases, meme stock thrive during periods of monetary policy easing.

GoPro stock price technical analysis

GPRO stock chart | Source: TradingView 

Technicals have also contributed to the ongoing GPRO stock price surge. As the chart above shows, it was forming the highly bullish falling wedge chart pattern on the daily chart. The rebound happened as the two lines neared their confluence level. 

GoPro share price has surged above the important resistance level at $1, and formed a golden cross pattern as the 50-day and 200-day moving averages have crossed each other. 

The stock also seems to be forming a double-top pattern whose neckline is at $1.17, and the upper one is at $2.36.

Therefore, while the company has weak fundamentals, the ongoing meme stock frenzy may continue, pushing it to the double-top point at $2.36, which is about 42% above the current level.

Read more: Here’s why the GoPro stock price is surging and what comes next

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