May 13, 2022 06:38 GMT
- 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