Rand Extends Losses Amid Weaker Precious Metals, Pre-Election Jitters Evident

A dynamic correction of the recent sell-off in USD/ZAR has continued today, with the pair adding a further 950 pips or so to last change hands at 18.3600. From a technical standpoint, with the 20-EMA providing immediate resistance at 18.4286. On the flip side, bears look for losses past May 21 low/round figure of 18.0290/18.0000.

• South Africa's CPI inflation ticked lower in April, printing marginally below expectations, but this is unlikely to materially affect the SARB's calculus ahead of its monetary policy meeting on May 30. All six economists surveyed by Bloomberg so far call for no change to interest rates.
• In the meantime, national elections are set to steal the limelight, with local assets drawing some support over the past month from the conviction that it might be sufficient for the ANC to partner with one or more smaller parties, without having to team up with the radicals. That said, there is a degree of uncertainty around the outcome, with USD/ZAR 1-week implied volatility soaring to nine-month highs today.
• SAGB yields have crept higher across the curve, with 10-year breakeven inflation rate rising to 6.58%.
• The aggregate BCOM Index has shed 0.9%, with the precious metals subindex down 1.9% at typing.