Rand Advances On Positive Lead From China, Firmer Precious Metals

Spot USD/ZAR has been losing altitude through the Asia session and into the European morning, with the rand currently outperforming its EMEA peers. The rate last deals at 18.6942, around 1,000 pips lower on the day. A breach of Jul 4 low of 18.6121 would signal scope for a deeper sell-off. Bulls look for a recovery towards 19.2346, 61.8% of the Jun 1 - 16 bear leg.

• The yuan garnered some strength overnight as China's state-run financial newspapers flagged potential for more measures to support the economy, while the PBOC continued to lean against redback depreciation via its daily mid-point fixing. The prospect of more supportive economic policies from the top buyer of South African commodities may have set a positive tone for the rand.
• The commodity complex is slightly firmer today, with the BBG Commodity Index last seen ~0.5% higher on the day. The precious metals index has also added ~0.5%, with spot gold trading ~$11/oz. above neutral levels.
• SAGB yields have declined across the curve, with 10-year breakeven inflation rate down 10bp to 6.79%.
• On the docket today are South African manufacturing production & comments from SARB Governor Kganyago.