Better Risk Sentiment Supports Rand

Spot USD/ZAR has lost some altitude and last operates at 18.4966, down ~1,250 pips on the session. Should the pair dip under Aug 2 low of 18.2582, bears could target Jul 27 low of 17.41.93. On the flip side, bulls keep an eye on 19.3301, the 76.4% retracement of the Jun 1 - Jul 27 downleg.

• The rand has shown little immediate reaction to headlines suggesting that China's state-owned banks could lower deposit rates for the third time this year in another attempt to boost economic growth. China's economic woes are a negative risk for the rand, given South Africa's close trade relationship with Beijing.
• Wider improvement in market sentiment is lending support to the South African currency, which sits atop the EMEA pile at typing. With the Jackson Hole symposium now in rear-view mirror, riskier assets are finding poise today.
• The commodity complex has strengthened, with precious metals adding ~0.2% this morning, a positive for the rand. SAGB yields have ticked higher but South Africa's 10-year breakeven inflation rate sits at 6.55%, close to its lowest levels since mid-August.