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Continued Gold Rally Helps Prop Up Rand But Election Spectre Looms Large

ZAR

Selling pressure continues to define USD/ZAR price action amid continued gains for spot gold (last +$14.4/oz., refreshing all-time highs). The pair trades at 18.5385, over 1,000 pips below neutral levels, narrowing in on Mar 13 low of 18.5066. A break here would bring Dec 29 low of 18.2550 into play. Conversely, bulls look for a rebound above Mar 28 high of 19.1063.

  • SAGB yields have eased off across the curve, with 10-year breakeven inflation rate last seen at 6.89%. The FTSE/JSE Africa All Share Index is little changed, after printing new three-month highs.
  • The prospect of a tight May 29 election continues to loom large, with USD/ZAR 2-month implied volatility running at elevated levels (lat 14.4%) after a spike towards the back end of last month.
  • The National Treasury holds its weekly bond auction for the combined ZAR3.75bn worth of SAGBs maturing in 2032. 2037 and 2040.
  • South Africa's February manufacturing data will cross the wires at 12:00BST/13:00SAST.

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