Rand Corrects Yesterday's Advance, Inflation Comes In Marginally Below Expectations

South African inflation data missed expectations at the margin, with headline CPI coming in at +5.2% Y/Y versus +5.3% expected. The rand has shown a muted reaction to the release of the data, having depreciated earlier this morning in a correction of yesterday's rally to fresh multi-month highs. The latest inflation data is unlikely to change the near-term rate outlook, given the SARB's intention to bring inflation sustainably to the +4.5% target mid-point and its signalling of a preference for an even lower target.

• Spot USD/ZAR last deals at 18.1787, around 1,000 pips above neutral levels. The initial layer of resistance is provided by the 20-EMA at 18.4281. The RSI dodged entering oversold territory and is heading higher. Bears look for renewed losses past the psychologically significant 18.0 figure.
• SAGB yields have inched lower across the curve, with South Africa's 10-year breakeven inflation rate last seen at 6.52% after a sharp decline from cycle highs printed in April.
• The composite BBG Commodity Index has shed 0.3% today, with the precious metals subindex down 0.2%.