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Pre-Election Jitters Keep ZAR on the Backfoot

SOUTH AFRICA
  • USD/ZAR trades +0.42% higher this morning, tracking early upside in the BBDXY as pre-election jitters keep ZAR bulls on the backfoot.
  • The cross rose +0.76% on Friday, with uncertainty over the elections pushing price action to an intraday high of 15.3281.
  • Today's focus will be on local elections, with a number of polls showing a more dire situation for the ANC with the threat of it losing its 50% majority for the first time since 1994, and also a potential drop for the DA to below 20%.
  • One concerning dynamic is the notable uptick in support forecast for the EFF to double-digit levels (10-14.5%) – suggesting a more populist pivot within the voter base.
  • Results are expected within 3-4 days, and also expected to reflect a greater amount of coalition governments in key metros – which may be a hinderance to reform implementation.
  • With limited data on the agenda, elections will be the primary focus, alongside US data and Wednesday's FOMC with tapering expected to be announced for mid-Nov and the discussion of inflation likely to be key.
  • Momentum in USD/ZAR remains bullish with an eye on 13.40-13.60 as uncertainty around elections remains high, but may be tempered into the following week as the more positive fiscal picture in the MTBPS filters through.
  • Intraday Sup1: 15.1689, Sup2: 15.1089, Res1: 13.3948, Res2: 15.4834
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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