Rand Gets Reprieve From U.S. Inflation Data, USD/ZAR Prints Multi-Month Lows

Spot USD/ZAR has been one of the main gainers in EMEA space after U.S. CPI figures matched expectations, sending the greenback into a tailspin and offering support to risk appetite.

• The Rand has benefitted from U.S. inflation data through the commodity channel, with the BCOM index extending gains to last operate ~1.1% better off. The precious metals subindex is up ~1.2%, while gold printed its best levels in eight months.
• Local-currency bonds caught a fresh bid, with yields last seen 9.5-10.7bp lower across the curve, with 10-year breakeven inflation rate falling to 6.07%.
• USD/ZAR implied volatilities have retreated once U.S. data crossed the wires, with overnight tenor pulling back sharply from one-month highs printed earlier in the session.
• Spot USD/ZAR lodged a new five-month low at ZAR16.6950 before ticking away from there and last sits at ZAR16.8000, down ~1,180 pips on the day. The next technical target below is Aug 25 low of ZAR16.7102.
• The release of U.S. inflation figures countered the impact of earlier comments from South Africa's Finance Minister who expressed support for broadening the SARB's mandate in include employment creation.