Rand Continues To Soar, USD/ZAR Enters Eighth Day Of Losses

The rand extends its dynamic recovery, taking the lead in the EMEA space again, as USD/ZAR enters its eighth consecutive day of losses. The rate last deals at ZAR18.5872, down ~1,690 pips on the session, with bears looking for further losses past May 2 high of ZAR18.5075 and towards a couple of Apr intraday lows around the ZAR18.00 figure. Bulls see Jun 1 high of ZAR19.9204 as their initial target.

• Participants will be looking for hints on whether the rand's recent surge is sustainable. USD/ZAR 1-month risk reversals are struggling to extend their recent, albeit the downward shift continues further out the curve. However, the latest CFTC report showed that speculative net short positioning refreshed record levels in the week through June 6.
• There is little clarity over the potential for the BRICS summit to be hosted by South Africa as the presidency refused to comment on the matter over the weekend. IOL reported that a special inter-ministerial committee proposed three options, all of which advise against an in-person visit by Russian President Putin. Their source said that moving the summit to China would affect President Ramaphosa's plan to invite other leaders of the Global South to the conference and would "add to the feeling that South Africa has capitulated."
• Local-currency bonds continues to gain strength and are firmer across the curve today, with 10-year breakeven inflation rate easing to 6.83%. The BBG Commodity Index has shed ~0.2%, but the precious metals subindex has recouped initial losses.