Rand Ekes Out Gains, USD/ZAR Extends Correction

USD/ZAR last deals at 19.2216, almost 700 pips lower on the day, extending the correction of its rally from the back end of last week. The pair is flirting with Jan 22 high of 19.2180, a recent breakout point. Continued losses would shift the focus to Feb 21 low of 18.7622. On the topside, a clearance of Feb 23 high of 19.3899 would expose Oct 6 high of 19.6399.

• SAGBs are slightly firmer across the curve, with South Africa's 10-year breakeven inflation rate falling to 6.49%. Yields have more than unwound initial upticks, which some linked to comments from Fitch, who warned that some of the assumptions in the 2024 Budget were quite optimistic. Note that the Treasury holds an auction for ZAR1.3bn of 2040 bonds, ZAR1.3bn of 2044 bonds and ZAR1.3bn of 2048 bonds, with the results coming out at the bottom of the hour.
• From a cross-asset perspective, the BBG Commodity Index has added 0.4% this morning and the precious metals subindex is up 0.5% as gold trades ~6.5/oz. better off.