Rand Garners Some Strength, Summit Of BRICS Foreign Ministers Continues

Spot USD/ZAR extends its move away from a fresh all-time high printed yesterday at ZAR19.9204. The rate has now reversed its weekly gain and is on track to register its first weekly loss since mid-April. Recent days have seen pullbacks in USD/ZAR risk reversals, with one-month tenor moving away from a cyclical peak touched on May 26, amid moderation in bullish sentiment among options traders.

• When this is being typed, USD/ZAR trades at ZAR19.5378, almost 900 pips lower on the day. A breach of May 24 low of ZAR19.1352 would allow bears to set their sights on May 16 low of ZAR19.9945. Conversely, topside focus falls on the psychologically significant ZAR20.00 figure.
• From a cross-asset perspective, local-currency bonds have edged higher today, with 10-year breakeven inflation rate easing to 7.19%. The FTSE/JSE Africa All Share Index has added ~1.4% this morning, building on yesterday's gains. The composite BBG Commodity Index has inched higher, but the precious metals subindex is little changed.
• SARB Deputy Governor Rashad Cassim said that investors "pick up these very negative signals from the government about all sorts of issues," which weighs on the rand and exacerbates price pressures. The official called on the authorities to improve their communications about their plans to deal with load-shedding.
• The focus in South Africa remains on the ongoing BRICS Foreign Ministers summit in Cape Town. The bloc's chief diplomats will be joined virtually by their 15 counterparts at a "Friends of BRICS" meeting.