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Markets Eye +50bp SARB Hike as ZAR Weakens 10.31% Since the Last Meeting

SOUTH AFRICA
BulletEM BulletEmerging Markets
  • USD/ZAR trades -0.45% lower this morning, tracking early weakness in the BBDXY. The cross is probing 16.00 support after failing three times to break above Monday’s high at 16.2706.
  • Broad-based risk off, CNH weakness and selling pressure in US equities has been keeping high-beta ZAR on the backfoot this week, with softer mining data also weighing on the outlook somewhat.
  • For today’s session, the cross should trade in line with global risk sentiment as the focus shifts to next week.
  • The SARB is broadly expected to deliver a +50bp hike to 4.75% to tame broadening inflation pressures and avoid falling behind the Fed.
  • Since the last meeting, ZAR has depreciated by 10.31% vs the greenback and will risk further weakness if the MPC delivers too dovishly on its forward guidance.
  • 1x4 FRA-Jiba3m spreads have remained stable in the +45-48bp range since 5 May, making anything short of a +50bp hike a dovish surprise for markets.
  • Intraday Sup1: 15.9593, Sup2: 15.7965, Res1: 16.1331, Res2: 16.2064
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  • USD/ZAR trades -0.45% lower this morning, tracking early weakness in the BBDXY. The cross is probing 16.00 support after failing three times to break above Monday’s high at 16.2706.
  • Broad-based risk off, CNH weakness and selling pressure in US equities has been keeping high-beta ZAR on the backfoot this week, with softer mining data also weighing on the outlook somewhat.
  • For today’s session, the cross should trade in line with global risk sentiment as the focus shifts to next week.
  • The SARB is broadly expected to deliver a +50bp hike to 4.75% to tame broadening inflation pressures and avoid falling behind the Fed.
  • Since the last meeting, ZAR has depreciated by 10.31% vs the greenback and will risk further weakness if the MPC delivers too dovishly on its forward guidance.
  • 1x4 FRA-Jiba3m spreads have remained stable in the +45-48bp range since 5 May, making anything short of a +50bp hike a dovish surprise for markets.
  • Intraday Sup1: 15.9593, Sup2: 15.7965, Res1: 16.1331, Res2: 16.2064