Rand Lags EMEA Peers Despite Gains Against Dollar

The rand has firmed Monday, though losses of the local currency against the greenback lag that of the broader USD index. At typing, USDZAR is down 0.15% near 18.81. The pair has respected Friday’s lows at 18.7432 but has traded below the 50-day EMA for the entirety of the session today. A more sustained break of that average, which intersects at 18.9381, could signal scope for a deeper retracement and expose 18.3805, the Aug 24 low.

• Though the Bloomberg commodity index has shed 0.77% today, the precious metals subindex stands ~1% firmer – potentially providing a tailwind to the rand. Limited domestic headline flow means the currency has – and will likely continue – to be influenced by global risk events.
• Looking ahead, the medium-term budget plan takes focus on Wednesday. Of the sell-side views we have seen so far, widening fiscal deficit projections are expected:
  • See Goldman Sachs here.
  • See Barclays here.