Election Continues To Set Tone For Rand

Spot USD/ZAR has surged to levels last seen over a month ago, adding 3.1% over the course of the past three days. South African assets have come under pressure as early results of the elections started trickling in, the key takeaway being that support for the ANC is likely to be in low 40s. This increases the range of possible post-election outcomes, as well as keeps the least market-friendly scenarios on the table.

• The rate last deals at 18.8401, up 850 pips on the day. The pair has taken out key DMAs on its latest upswing and bulls now take aim at 18.8678, the 61.8% retracement of the Apr 19 - May bear leg. On the downside, the focus is on May 21 low/round figure of 18.0290/18.0000.
• The SARB left interest rates on hold but also flagged expectations of a faster return to the inflation target mid-point. The stand-pat decision was widely expected and backed by all 6 members of the MPC.
• SAGB yields sit higher across the curve, extending yesterday's gains. South Africa's 10-year breakeven inflation rate last sits at 6.79%.